What really went down at the Seven shareholders address (plus that Kerry Stokes faux pas)
Seven chairman Kerry Stokes didn’t seem to catch the number of the bus that hit him during a surprise address to shareholders and media in Sydney on Wednesday.
NSW
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DESPITE being in damage control for more than two years over CEO Tim Worner’s affair with a former Seven West executive assistant, Seven chairman Kerry Stokes didn’t seem to have caught the number of the bus that hit him during a surprise address to shareholders and media in Sydney yesterday..
Possibly fatigued after jetting into Sydney from Colorado, Kerry “I’m Chairman” Stokes mistakenly called Amber Harrison “Harris” twice after appearing unannounced at the meeting to take questions and spare CEO Worner the grilling that has been coming since Harrison revealed her 18-month affair on December 18 sending Seven shares into a nosedive in the days that followed.
Stokes, 76, was quick to portray Harrison, the woman Worner sent hundreds of steamy texts to in 2013 and 2014, as a thief. He revealed he had told his married CEO to “isolate” himself from the simmering scandal in order to run the company after the affair came to light.
“Good morning ... It’s Kerry Stokes here. I’m chairman,” Stokes began. “I’d just like to say at the outset the matter relating to … Amber Harris (sic) has been the subject of an independent investigation, has been the subject of various releases by the company which we stand behind.
“Tim Worner himself continues to enjoy the full confidence of the Board as our CEO because he’s doing an outstanding job. Whilst I will have trouble answering questions with Miss Harris (sic) because we have an injunction in place. As difficult as it is, most of you will have to wait a week to get the answers.”
A Federal Court injunction will see Seven’s lawyers take on Harrison, 39, next week over her release to Twitter of sensitive documents she retained from her time at Seven.
Stokes’s assurances about Worner being “outstanding” failed to satisfy media representatives who, unusually, had been refused admission to the meeting and instructed to participate via teleconference hook-up.
During a short 15 minute window, tough questions rained down upon on Stokes and Worner.
Had CEO Worner offered his resignation? Why had Stokes decided to keep Worner on? Had Stokes silenced director Sheila McGregor who resigned from the SWM board the day after it received the results of an independent review finding Worner innocent of allegations made by Harrison that he had used cocaine with her at a work conference and racked up personal charges on his corporate credit card during their rendezvous?
Taking the lion’s share of questions, Stokes looked determined to shield Worner, who he is said to have personally backed into the CEO role.
Yet one stinging question slipped past him.
“So how’s it going in your personal life Tim?”
Worner was quick to shut down any talk about the state of his marriage: “That’s a private matter and I hope you will respect that privacy. Next question please.”
Stokes too flared briefly when the question concerning former director McGregor being gagged was put: “How dare you!” he fired at a reporter from The Australian.
“Are you seriously suggesting I or my board would tell a director what they can and can’t do? How dare you! Sheila McGregor is a very forthright person who’ll make the comments she deems appropriate when she thinks they’re appropriate.”
To nearly everything else the answer was generally a denial and the assurance this business concerning Harrison was “two and a half years” old.
Had it been a strategic business decision for Seven not to cover the Harrison scandal on its news? - “I’m not quite sure what you’re referring to,” said Stokes.
How had Worner been disciplined? - “We had a very robust discussion,” Stokes assured.
What is the reputational damage to Seven? - “You’ve got some misconceptions there….” Stokes chastised.
What about corporate governance? - “There is no governance issue,” the chairman assured media and shareholders.
Having been the first person to interview Harrison in November 2016, this writer had hoped to put a series of questions to the chairman as well but unfortunately the brief 15-minute Q&A session ended before the curator took my call.
Had I been selected, I would have asked the chairman: Did former Seven West COO Nick Chan, Harrison’s boss (made redundant December 2014), and former CFO David Boorman (resigned six weeks after Chan in January 2015) — like McGregor — also object to the handling of Harrison’s dismissal? And did they become part of a larger cover-up to conceal Worner’s secret affair?
Perhaps in time Chan and Boorman, like McGregor, will answer these questions themselves.
TRANSCRIPT OF MEDIA Q&A SESSION INVOLVING SEVEN CHAIRMAN KERRY STOKES
AT the Seven West Meeting 2017 half yearly results presentation, held at 10am on February 15, 2017, SWM’s embattled CEO Tim Worner introduced a panel of executives — chief finance officer Warwick Lynch, chief revenue officer Kurt Burnette, chief digital officer Clive Dickens and the CEO of Pacific Publications Gereurd Roberts.
He made no mention of Seven chairman Kerry Stokes who intervened unannounced at the end of the meeting.
Worner opened the presentation saying he didn’t wish to give further “oxygen” to reports about his relationship with former Seven executive assistant Amber Harrison.
“Over the past two months, much has been written and discussed concerning the ongoing claims of a former employee. I have apologised for what did happen and we don’t wish to give any more oxygen to things that did not happen,” Worner said addressing media who were not permitted to attend the meeting but were plugged in via a teleconference hook-up.
“The company has made a number of public statements on the matter and will continue to keep the market informed. Our team has been and continues to be totally focused on driving home our leadership. We have not been distracted.
“Our performance and the commitment of our people, in particular in the past two months, has been unwavering. In fact, our television business had its best summer in five years, growing its audience summer on summer and winning every key demographic.”
Following the presentation of results that showed Seven’s first half net profit had dropped 91 per cent to $12.4 million, Worner invited questions from media.
This is a complete transcript of that Q&A session:
Q1: Has it been a strategic business decision by Seven West Media not to cover the Amber Harrison issue (on) it’s media outlets and is the board happy with that decision?
STOKES: appearing unannounced: “Um ... Good morning ... It’s Kerry Stokes here. I’m chairman. I’d just like to say at the outset the matter relating to (UNCLEAR) Amber Harris (sic) has been the subject of an independent investigation, has been the subject of various releases by the company which we stand behind.
“Tim Worner himself continues to enjoy the full confidence of the Board as our CEO because he’s doing an outstanding job. (UNCLEAR) Whilst I will have trouble answering questions with Miss Harris (sic) because we have an injunction in place. As difficult as it is, most of you will have to wait a week to get the answers, I’m quite sure, in the Federal Court next week most of the answers you’re looking for will be covered. In the meantime, I’m not aware of any restraint on Seven News covering this issue, in fact I think there’s a very large article on this in the West Australian this morning. I’m not quite sure what you’re referring to.”
Q2: Can you clarify which media has covered this issue?
STOKES: “I would suggest our news editors would cover what they think is appropriate when they think it’s appropriate. I’m not aware of the coverage of our various news.”
Q3: Mr Stokes at any time in the Amber Harrison saga did the chief executive ever talk about the possibility of stepping down or in fact offer his resignation?
STOKES: “This is a matter that goes back now nearly three years and in my discussions, when it first came to light, Mr Worner offered to do whatever was in the best interests of the company. The board was resolved at the time the best interests of the company was Mr Worner staying.”
Q4: That statement of February 3 said the company had disciplined the chief executive. Can you give us any sort of background or colour on the sort of warning that might have been imposed? The conditions of his employment?
STOKES: “I don’t think I’m given to polite language ... You can take from that we had a very robust discussion.”
Q5: Can you put any estimate or figure on the reputational damage to Seven West — not financial but reputational damage — and how concerned you are that so many shareholders and investors must be concerned about why Mr Worner is still in the job?
STOKES: “You’ve got some misconceptions there. In regard to my reputation, (UNCLEAR) we’ve got revenue percentage higher than we’ve ever had. You talk about shareholders, we’ve got 24,256 shareholders, I’ve had four letters and I’ve had one phone call. So I think most of our shareholders see this for what it is and they accept that the board is taking appropriate action.”
Q6: I note you were saying you were restrained by the interim injunction but I note that one of your board members, Jeff Kennett, has been quite vocal about this matter. is he been speaking officially or just off his own bat?
STOKES: “(We’ve all seen) ... Jeff Kennett’s comments and can relate to his frustration. He hasn’t spoken as the company’s spokesman (but) as Mr Kennett.”
Q7: I was trying to get in touch with (recently departed board member) Sheila McGregor but i’m told she’s in meetings all day so I wonder if you can explain — The ASX statement wasn’t very expansive — but why did she stand down from the board just after the report into the affair was handed to the board? And it looks like she wasn’t happy with the inquiry or with Tim Worner staying on? Maybe you can clear that up for us?
STOKES: “Um Sheila McGregor played a very important role (on) our board. She helped recommend the person who made the investigation and played a very strong role in the briefing of that investigation. We as a board received the report with unanimity. The reason for Sheila’s resignation remains between her and I and I respect her enough to let her answer for herself for the reasons she resigned. I suggest you keep trying to get her.
Q8: Mr Stokes it’s not that she hasn’t been instructed by yourself or the Seven West board not to comment on the matter? You think she’ll be forthright in explaining?
STOKES (angry): “That’s outrageous Will (Glasgow, The Australian). Are you seriously suggesting I or my board would tell a director what they can and can’t do? How dare you! Sheila McGregor is a very forthright person who’ll make the comments she deems appropriate when she thinks they’re appropriate. Thank you. (A voice, possibly Worner’s, moves proceedings along: “Thanks very much next question ...”)
Q9: I have a question around the issue of governance. There’s a number of outstanding matters for the group — (former commercial director of programming) John Fitzgerald which is a continuing legal matter over embezzlement — there’s an investigation underway as to use of funds in the Los Angeles office — and of course we had the accusations of theft from Amber Harrison. One might be put down to a mistake but surely three is a pattern. Is there an ongoing issue of governance at the group and how can shareholders be confident that someone’s actually watching the till?
STOKES: “Thank you. I can assure you I watch the till. The facts of the matter are if we didn’t have these actions you would be concerned. The fact that we’ve had some changes in systems — some new approaches that caught some of these issues have been, I think, (UNCLEAR) satisfied that we are on top of them. In regard, you say alleged stealing by Amber Harrison, the facts of the matter are there was a significant amount of money taken by her and no other excuse for it than just plain (UNCLEAR).
WARWICK LYNCH CFO interrupts: “Could I just say Mr Chairman, I’d like to add we have increased our internal audit resources and reviews over the past number of years. Together we’ve improved system controls and we’ve had in depth reviews of our cost base going back many years.”
Q10: Does that mean the systems historically weren’t up to scratch?
STOKES: “No, our systems were indeed, as with most companies, we deal with a lot of people and a lot of money. Now and again dishonest people work for us and no system will stop dishonest people unfortunately.”
Q11: I’d like to ask Tim Worner what he makes of the whole issue? How have you managed to stay so focused over the last couple of months when you’ve been in the headlines when everyone in australia has been talking about you? I’d also like to ask Mr Stokes if he could just explain in a bit more detail why he decided to keep Tim on?
STOKES: “First of all let me answer the first part of that. The matter is two and a half years old and at the time it arose I said to Mr Worner he must have nothing whatsoever to do with this issue or the people involved and he has had nothing to do with it. He’s been totally isolated ... since that point in time. And that’s why he’s been able to focus on what he’s done and done very successfully. I’m very proud of where (we’ve) taken Seven in the last couple of years under his direction and the strategies that we’ve employed. At the end of the day it has been stressful for he and his family, of course it has, and we recognise that and actually appreciate a great deal the diligence he’s put in in the circumstances and how he’s driven our company to where it is at the moment.”
WORNER: “I want to assure all of you. that I’ve been very focused. People in this room will vouch for that. It was very poor judgment — what I did — something I continue to regret — and attempt to repair and it’s hurt a lot of innocent people but as I said on the top of the call, I don’t know if you were listening, I apologised at the time and again in December. I’m very much owning my decision and for us we need to get on the with transformation of Seven West Media.”
WORNER: “Final question thanks.”
Q12: So how’s it going in your personal life Tim?
WORNER, sounding flustered: “That’s a private matter and I hope you will respect that privacy. Next question please.”
Q13: Mr Stokes, given the Allens’ investigation dealt expressly with the allegations levelled at Mr Worner, will there be any subsequent reviews to look at how Seven’s corporate governance or the corporate culture within the organisation contributed to this incident occurring?
STOKES: “No there is no governance issue. The facts are this is something (that happened) two and a half years ago. I think it’s two and half years ago we signed our agreements with Miss Harrison and there has been no governance issue regarding that, just disputes on her part. The board will have no further inquiries. We were disappointed that we were forced to make such a serious investigation into such irrelevant allegations which have no substance at all.”
WORNER: “On your question regarding culture, I do not think that you achieve the sort of results this organisation has with a culture which is no good so there would at least have to be some boxes ticked in terms of our culture to actually perform to the level that we do. Can we have a better culture? Absolutely. Is that something we’re focused on going forward? Absolutely.”
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