The shockwaves would have been felt around the world over the weekend when billionaire investor Prince al-Waleed bin Talal was among a clutch of Saudi princes and ministers arrested in the kingdom.
And the real impact of the arrests could hit a very well-known former Aussie next week.
Prince al-Waleed has stakes in many prominent global companies, but none are more important than his crucial stash of voting stock at Rupert Murdoch’s 21st Century Fox.
Prince al-Waleed’s voting stake has made the Murdoch family’s position at both News Corp, and its more lucrative spin-off, 21st Century Fox, impregnable.
The Murdoch family’s control of the company is not quite assured with its 38 per cent stash of voting stock, which dwarfs its economic interest of only 14 per cent.
But add in the prince’s stake and the family could weather severe storms such as the British phone hacking scandal without having to make too many concessions to other investors.
But then things changed for News Corp.
Three years ago the Murdochs came within a few million votes – a wafer-thin margin by corporate standards – of their fellow shareholders voting to unwind its dual class share structure, which allows the Murdochs to control the company via their tight grip on the voting stock.
A massive 47.4 per cent of votes cast supported a proposal to eliminate the company’s dual-class share structure, which, had it passed, would have unlocked the Murdochs’ iron grip on the company.
How did this happen with the prince by Rupert’s side?
It later emerged that the prince had sold almost all of his News Corp shares, making Murdoch vulnerable to other investors for the first time.
Now it just happens that 21st Century Fox is holding its annual shareholder meeting next Thursday, and one of the items on the agenda is a vote to unwind the dual class share structure.
As of December 31, 2015, Prince al-Waleed’s group owned 5 per cent of 21st Century Fox.
If the prince no longer controls this stake, or has not voted on it yet, the voting result could be cataclysmic for Rupert.
But Rupert might be helped by the Disney news overnight, with his media group reportedly talking to Disney about selling its movie and TV production businesses for an appropriate sum.
There is nothing like a multibillion-dollar cash carrot to placate investors. McGrath Culpa
So this is what a real estate bust looks like.
John McGrath’s disastrous float of his real estate agency, McGrath Ltd, hit a new low following the latest downgrade on Monday.
The real estate agency has lost some 78 per cent of its market value since its float less than two years ago.
The promise back then was to expand its office base and continue to devour other agencies to drive growth.
As McGrath told investors in its prospectus, “acquisitions are considered an important part of McGrath’s future strategy”.
The company is now in such a financial hole that all of these expansion plans are on hold and the agency plans to shrink via some significant cost-cutting.
And CBD can’t wait for the shareholder meeting in a few weeks where chairwoman Cass O’Connor gets to explain what the company means by “balancing shareholder earning requirements with longer-term objectives”.
It sounds like the shareholder pain is going to get worse before it gets better, with more money being invested into the business.
So it is a pity that McGrath did not hang on to more cash when it raised $130 million from new investors less than two years ago.
Half of this cash went to McGrath and other existing investors. Another $31.5 million was splashed on buying franchise agents like the operations of part-time racing car driver Shanes Smollens.
In fact McGrath Ltd was left with a paltry $7.9 million for working capital needs – which is substantially less than the $10.1 million it spent on transaction costs for the float. What does that tell you about the priorities at the time of the float. Google Pay
Shayne Elliott and his fellow goody two-shoes crew at ANZ Group did not have to forfeit their bonuses last year, but it still did not help their underpaid boss get the better of his Commonwealth Bank rival, Ian Narev.
Comparing what the two banks have now reported as the ‘actual pay’ of their respective CEOs, Elliott’s $4.26 million worth of remuneration puts him roughly $1.25 million short of Narev despite the latter forgoing his bonus for the period.
At least Elliott’s underlings are not suffering to the same degree, especially the new recruits.
CBD’s eye has always been on ANZ’s new CFO, Michelle Jablko, who will receive $1.66 million in deferred equity incentives – starting this month – for bonuses she sacrificed to hop from investment banking to the banking world.
But what was CBD thinking when we didn’t twig to the pay implications of former Google exec Maile Carnegie?
She collected $2.8 million worth of shares last year as part of a $3.26 million worth of deferred equity she gets for jumping from Google. In fact her actual pay topped that of her boss, Elliott, at $4.34 million. The Hon Hartzer
Meanwhile, over at Westpac, boss Brian Hartzer lightened the mood his joke on the citizenship debacle.
“Well, the good news about citizenship is I’m a dual citizen so you don’t have to worry about me going into parliament,” he said while unveiling an $8 billion profit.
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