I’m basically about to turn about 40 and I’m sort of thinking that maybe it is time to try and get inside the tent and actually get onto a couple of boards. I figure that the most useful one for me to get on would be the ASX, which obviously is the rule-making body for governance in the Australian market. And to influence the rules would be probably more instructive and more influential than throwing rocks at individual companies, which I’ve been doing for a decade and which I don’t think you can sort of do forever.
AG: How do you think you’ll go changing your reputation as a bit of a trouble maker to get inside the tent?
SM: Well I’m well regarded at RACV and at Manningham and therefore I think the strongest argument I’ll have in that regard will simply be my performance when inside the tent. The AMP has been in touch, they’re getting me to come to Sydney to speak to 30 of their sort of communications and executive people. I do a lot of speaking gigs. I’ve done the Institute of Company Directors conference a few times. I’ve done more than 300 speeches to credible mainstream organisations, I’ve commentated on the ABC, I write for Fairfax. So I don’t think I’ve got a major reputational issue where credible people won’t engage me. But obviously in the transition I need to [move] from publicly criticising companies to not being a public critic and actually sitting silently in a couple of boardrooms – and that would be a major transition. But I’m feeling, over the next year or two, I’m looking to move that way.
AG: We wrote a story recently just talking about the fall in regard for senior executives. What do you think are going to be the biggest challenges in the next few years for these senior executives in companies, in convincing the community that they are worthy of their fees and that they have a worthwhile contribution to make?
SM: Well I think that clearly we’ve seen executive pay in Australia get a little bit out of hand and I think that the David Thodey contract at Telstra is a major step in the right direction and similarly the Macquarie Bank cuts in pay – also very important. So I don’t think the challenge in the future will be particularly difficult, provided that the early trend continues and we don’t see Frank Lowy getting $16 million a year and Rupert Murdoch taking $30 million a year. So, I think there will be a global backlash lead by Obama against excessive executive pay and I think Australia, particularly with the Rudd government in office, will fairly rapidly fall into line and I think that the executive class will sniff the wind on this and will adjust accordingly.
AG: Now what about Fairfax? You write for Fairfax but you are keen to join the board? What do you think of their online strategy and where they’re heading?
SM: Well I’ve previously run for the Fairfax board twice but I haven’t publicly signaled any intention to run again. I think that [with] the Fairfax online strategy (leaving the AFR.com aside, which has been a debacle), clearly they are obviously number one in business coverage with BusinessDay.com.au, which I think has got more than two million unique visits in the last month – which was almost double, I think, their nearest rivals. And with TradeMe in New Zealand, obviously they’ve got a major transactional business. I think overall, again the first move advantage of hitting the internet early with The Age and the SMH was very successful. I think Fairfax has dropped the ball a little bit in terms of personal finance coverage and certainly, obviously the major problem with AFR.com.au.
AG: But what would you do with AFR? I mean if you don’t charge for it, you’re back to that problem that we talked about at the beginning.
SM: Well, I think that it’s an embarrassment and that it’s probably unsalvageable. If I was them, I’d buy Business Spectator.
AG: And then what, you’d change models?
SM: Well you’d call it AFR Business Spectator and you’d move to a free model and then you’d aggregate a lot more AFR content as well onto the very successful Business Day platforms. It’s almost like Fairfax doesn’t properly celebrate the success of Business Day because they’re embarrassed about AFR.com.au. But it’s chalk and cheese. One is a debacle and one is a runaway success.
AG: Are you going to try and run for the Fairfax board again?
SM: Look, I haven’t made any firm decisions about any future board tilts. I’ve signaled directly in a meeting with the ASX chairman David Gonski last week that I’m interested in, at some point, joining the ASX board. So, I think it’s most likely I’d probably run for the ASX board later this year and [with] any other tilts, I haven’t made any decisions. I’m not ruling anything in or out. I’m having a quick look at Macquarie Group right now and we’ll just see how various situations evolve.
AG: So Stephen, are your days as an entrepreneur over?
SM: No I think what I do is actually quite entrepreneurial.
AG: Well it is, but you might move further away from it.
SM: Well I’ve suddenly lucked onto a new revenue model in the last three months which is playing the angles of capital raisings. As part of The Mayne Report I’ve put together the world’s biggest small share portfolio. So I own shares in 650 companies. The average holding is only about $100 but because of all these discounted capital raisings that have been made in the last three months, I’ve literally made more than $150,000 in three months just ploughing into capital raisings and recycling the capital. And the paper profits in the pipeline are more than $100,000 in addition to that over the next six to eight weeks. So, suddenly I’ve actually got a very profitable line through shareholder activism, which is playing the margins of capital raisings by being on every single share register that matters in the country.
So I don’t need subscription revenue if I’m making 10 grand a week on capital raising, which is what’s been happening for the last three months.
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