John Mullen faces Treasury Wine Estates AGM scrutiny

He’s the new Qantas chairman and some shareholder groups fear John Mullen has too much on his plate to be a Treasury Wine Estates director.

Treasury Wine Estates chairman John Mullen. Picture: Aaron Francis

Qantas chairman John Mullen will have his many corporate hats under scrutiny at the Treasury Wine Estates annual meeting in Melbourne on Thursday.

While he is expected to comfortably be re-elected as chair of TWE, Australia’s largest wine company, Mullen’s election as a director of TWE is still being challenged by the Australian Shareholders Association and proxy firm Institutional Shareholder Services for directorship overload.

Mullen, 69, is currently chair of three major listed companies with global operations – Qantas, TWE and industrial pallet company Brambles – and is also a director of New York Stock Exchange-listed Brookfield Infrastructure Limited.

He is also chair of non-listed advisory company Scyne Advisory, a spin-off from PwC’s government consulting business, which is facing challenges as it seeks to carve out its role as a new player in public sector consulting.

Both the ASA and ISS have raised concerns about Mullen’s workload, particularly after he took over as chair of Qantas in April, while Dean Paatsch’s Ownership Matters is taking a more relaxed view, pointing to comments by Mullen that he plans to lighten his corporate load. It is expected that he will step down as chair of Brambles when a successor can be found. He has been chair of that company since July 2020.

ISS says a vote against Mullen as a director of TWE on Thursday is “warranted at this time on the basis of overboarding concerns”.

Under ISS’s policies, a director can hold up to five directorships of listed companies, with the chair role counted as two.

On that basis alone, Mullen’s three chairman roles put him in the ISS “too busy” category with the equivalent of seven directorships of listed companies, including Brookfield.

ISS’s recommendation is tempered with the observation of Mullen’s extensive experience in corporate Australia.

“Notwithstanding the overboarding concerns, it is acknowledged that Mr Mullen has a proven track record as an experienced and respected chair of large ASX boards, including Telstra,” it says in its report on the TWE meeting. “On this basis, shareholders may opt to support the re-election of Mr Mullen.”

Mullen’s corporate career has included chief executive roles as DHL Express and Asciano, five years as executive chairman of Toll Group and seven years as chair of Telstra.

But the Shareholders Association is less understanding.

“In 2023 the ASA supported Mr Mullen’s election as TWE chair despite a heavy workload given his advice that he was resigning as chair of Telstra,” the ASA says in its report outlining its voting intentions at the TWE AGM. “He subsequently replaced this responsibility with the chair of Qantas.”

In a pre-AGM meeting with the association, Mullen advised that he needed to wind down some of his commitments but said he would “not walk out on his responsibilities”.

“Mr Mullen noted that he is working towards succession planning with regard to some of his responsibilities for both listed and non-listed companies,” the ASA says. But it said Mullen could not name the roles he was planning to shed due to commercial reasons.

Mullen, who became a director of TWE in May last year, stepped up to the role of chairman at the end of its annual meeting last year following the retirement of former chair Paul Rayner.

ASA says it is also undecided about the proposed re-election to the TWE board of director Garry Hounsell, a former executive with accounting firms Ernst & Young and Arthur Anderson, also citing concerns about his workload.

It notes that Hounsell, a former Qantas director, is chair of listed Helloworld Travel and Electro Optic Systems and the Commonwealth Superannuation Corporation, and is also a director of the unlisted Findex Group.

“We consider his workload heavy,” the ASA says. “We believe Mr Hounsell is well qualified and can contribute to the board. “However, due to his heavy workload we remain undecided with regard to his re-election.

“At the AGM, we will seek further information about his workload and decide our voting on his response.”

Mullen is expected to explain his workload at the AGM.

At this point there are no significant groups planning to vote against the remuneration report, but ISS says it does have “persistent concerns” over the long-term incentive plans for chief executive Tim Ford.

Shareholders are expected to hear updates on TWE’s businesses in its two key markets – China and the US.

TWE shares have never recovered from their highs, before the imposition of tariffs on Australian wine by China in 2020.

Once riding high on the basis that it was the largest wine exporter to the China market, with shares at about $19.50 in late 2018 and $18.40 in late 2019, the company was hit hard by the China tariffs and has yet to recover.

Its shares closed at $11.69 on Wednesday, making its market cap worth $9.6bn.

Ford, who has been a strong proponent of a long-term commitment to the China market, was rewarded for his patience when the Chinese lifted the tariffs on wine in March this year.

Ford and his team, which have maintained a China base in Shanghai throughout the Covid pandemic and the tariff problems, were well prepared for the reopening of the market in China that has also allowed the company to raise the prices on Penfolds, a favourite with Chinese drinkers, in July.

TWE has stepped up its operations in China and has plans to make a big statement at the ­upcoming China International Import Expo in Shanghai early next month, with one booth promoting Penfolds and another promoting other TWE brands in China, including Rawson’s Retreat.

Ford will also be seeking to convince shareholders that TWE has finally got its US marketing strategy right with the acquisition of DAOU Vineyards in December last year for an upfront cost of $US900m and another possible $US100m ($150m) payable, depending on performance.

The world’s largest wine market, the US is the single most important market and source of profits for TWE, but the company has yet to prove its ambitious plans are a financial success.

Announcing the company’s full-year results in August, Ford said the company was now in the best position it had ever been, with its plans to shed low-margin commercial wines and focus on the needs of up-market wine drinkers in China and the US.

Thursday’s AGM will see presentations from both Mullen and Ford, who will be doing their best to argue that they are both in a good position to turn around the company’s fortunes.

TWE shareholders will be hoping they are right.

Originally published as John Mullen faces Treasury Wine Estates AGM scrutiny