The Crown Resorts Ltd (ASX: CWN) AGM was always going to be a tense affair with pressures building over the past few weeks. Accordingly, the Crown share price has fallen by 9% over the past month to yesterday. After today's AGM, however, the share price has been on the rise.
Crown Resorts chair Helen Coonan and CEO Ken Barton opened the meeting with apologies, acknowledgements of failure and the drive to improve. Nonetheless, it was still a blood on the walls affair with institutional investors seeking retribution for the current situation. Prior to the meeting, Ms Coonan acknowledged a significant protest vote ahead of the company's AGM.
Moreover, Mr Barton apologised in writing, stating there was no "intention to mislead" the current inquiry over relations with Consolidated Press Holdings Pty Ltd (CPH), majority shareholder James Packer's private company. There was also a formal announcement yesterday of the termination of all agreements between Crown and CPH.
What is moving the Crown share price?
During the motions to re-elect three directors, CPH abstained from the vote on directors and on the remuneration report, citing it as the right thing to do. This had the effect of ensuring the re-election of directors, but allowing a 'first strike' vote against the remuneration report.
As observed by the chair earlier, there was a large protest vote against Crown directors Jane Halton, Professor John Horvath, and in particular against Guy Jalland. Guy Jalland is connected to CPH, an issue which appears to have caused some consternation and impacts on the Crown share price.
After winning re-election with 68.54%, Prof Horvath stated he would likely resign from the board. He commented at the time: "The proxy position displayed on the screen indicates that without the vote of CPH, shareholders are not supporting my re-election today as a director."
This was later confirmed in a release from the company. Ms Halton said she also considered resigning due to the proxy vote, but believed that overall she had "sufficient support" from shareholders.
Meanwhile, the first strike vote Crown received against the company's remuneration report is significant. The two strikes system helps shareholders control the remuneration of directors. A first strike occurs if more than 25% of shareholders oppose a remuneration report. The second strike occurs if 25% or more of the shareholders oppose a subsequent remuneration report.
The board is then subject to a spill motion. This is where 50% or more of the votes will force all directors to stand for re-election within 90 days.
The road ahead
Ms Coonan apologised unreservedly for any failings during the AGM. She said the company intended to strengthen its risk management procedure, as well as its anti-money-laundering and compliance departments. The chair also pledged changes to the Crown board, adding:
In the area of board renewal, the board accepts that there needs to be an injection of new perspectives and expertise on our board… These changes need to be undertaken in a considered and thoughtful manner to ensure an orderly transition.
After a faltering start to the day, the Crown share price momentum has reversed and it is now up by 2.27% at the time of writing. Investors have clearly displayed a level of discontent with the performance of the board. Its response, the actions taken, and the promise of further action, appear to have calmed the waters.
