Jackson forced to resign?

Elizabeth Knight in the Sydney Morning Herald last week says that Margaret Jackson has paid the price for pushing the APA bid, saying that Chairman Margaret Jackson was a director whose tenure was looking particularly shaky yesterday as her fellow directors marched into the boardroom for their monthly meeting and rumours that Jackson had been forced to resign swept the market late in the afternoon, with the announcement that she will resign at the annual meeting in a few months coming late yesterday.

The syndicate of private equity that failed miserably in its Qantas board-and-management sponsored $11 billion bid for the airline last week finally admitted yesterday that it would not come back for a second go.

Jackson, as a tireless promoter of the private equity consortium, APA, had put herself in an untenable position as the independent chairman of Qantas.

Over the past week various institutional shareholders have spoken to or lobbied members of the Qantas board outlining their concerns with retaining Jackson as chairman.

They have apparently received a positive hearing from the board which until now had demonstrated tacit support for the chairman and management.

Most if not all of these institutional shareholders did not support the bid and recognised that the APA offer price was insufficient and given this situation, it would be almost impossible for the board to disregard the judgement of these shareholders who, in hindsight, have shown a better understanding of Qantas’s value than the board.

Institutions have nominated two directors, John Schubert and James Strong, that they would consider acceptable as a replacement chairman.

Strong is a former CEO of Qantas and in corporate governance terms this could pose some problems if he wants to take the chair. There is a view that Strong would dearly love to have the position.

Schubert is one of the most highly regarded directors in corporate Australia. He is the chair of the Commonwealth Bank and a director of BHP Billiton.

Talk around the industry yesterday was that Schubert was keen to take over as chairman of BHP Billiton when Don Argus eventually retires and this would preclude him from accepting the chairman’s role at Qantas.

Meanwhile, institutions said they would be happy with an outside candidate but offered no nominations.

A rumour swept the market yesterday that former Commonwealth Bank CEO and current Future Fund chairman, David Murray, might be a contender but this appears not to have been at the instigation of the major Qantas shareholders.

For her part, Jackson has maintained that she had done nothing wrong, other than perhaps some unwise choice of wording. As such she rejected suggestions that she might fall on her sword and resign.

The fact that she and the board supported the bid was an issue, but not the main issue.

Jackson had come out publicly and pushed shareholders into accepting this offer, telling them that they would be “mental” if they didn’t.

She crossed the line at this point and all shareholders would be forgiven for questioning her judgement.

In last Saturday’s Herald, Jackson was adamant that she would stand her ground, but the rot had set in and given the institutional backlash, there was no way she would survive the shareholder meeting later in the year, when she would have been up for re-election.

If there was sufficient groundswell among investors against Jackson the board, as shareholder representatives, would have had no choice other than to take matters into their own hands and ask Jackson to step aside. Apparently she worked this out for herself.

Report by The Mole from The Sydney Morning Herlad