Crown Resorts board breathes a collective sigh of relief for now

Jane Halton, seen above last year, kept her cool during the annual meeting, politely answering questions and selling the idea of the new-look compliant Crown. Picture: AAP

Acting Crown Resorts chair Jane Halton must have had a quiet sigh of relief at the end of the company’s virtual annual meeting on Thursday.

Battle-weary Crown shareholders voted overwhelmingly for stability on the company’s board at the meeting, with a resounding 95.88 per cent rejecting the idea of a board spill following the second strike.

After two years of upheaval and an almost complete turnover of directors over the past year, shareholders were prepared to deliver a big kick to the board over past practices, particularly over expensive payouts to former executives, with almost 31 per cent supporting the second strike vote on the remuneration report.

But when push came to shove, they called time on the revolving door of directors, strongly backing Halton, who is keeping the seat warm for incoming chair, former Telstra chief executive Ziggy Switkowski, who is still awaiting regulatory approval, and other directors.

There was also a significant vote of approval for new chief executive and former Lend Lease chief Steve McCann with 88.4 per cent backing his $5m-plus sign on payments and 79 per cent backing his retirement payments.

With Crown having lost a record $260m in the past financial year due to a combination of Covid closures and blows from inquiries in three states, and seen the departure of high profile chair Helen Coonan and nine of the other 10 directors who were on the board a year ago, shareholders effectively delivered a message that they were angry at past practices. But they wanted to back the new board and management as it faced its next big hurdle.

That is the release of the potentially explosive Finkelstein royal commission report in Victoria expected in the next 10 days or so.

Halton kept her cool during the meeting, politely answering questions and selling the idea of the new-look compliant Crown, but cutting off a potential long list of questions from shareholder activist Stephen Mayne.

But the results of the meeting – particularly the almost negligible support for a contingency motion to spill the board following the second strike – reflected what would have been extensive work behind the scenes by Halton and McCann talking with key shareholders in the lead up to Thursday’s meeting.

While online meetings lack the potential fireworks of AGMs in person, given all the issues facing Crown and its turbulent past two years, and the fact that the company is not out of the woods yet, there was always the possibility of a much more rowdy event.

And Crown has had its share of those.

The annual meeting now behind it, with mea culpas all round – including promises that there would be no repeats of the generous payments to former executives, and vows to improve governance and anti-money laundering practices and deal co-operatively with regulators, and a new age “purpose statement” (“creating exceptional experiences with respect and care for our communities”) – Crown is now bracing itself for the report.

The company will get no advanced notice of the content of the document, given that it would be under obligation to report what would be material information to its shareholders as soon as it knew about it.

There is little doubt that there will be some harsh words in the report including a severe rap over the knuckles for its past practices.

But the question is whether it will recommend its licence to operate in Victoria be torn up completely – which would be a massive step for a company which has been such a fixture in the Melbourne scene – or whether it will be sanctioned but given time to prove that it has got its house in order.

Victorian Premier Dan Andrews has promised he will take action on the report.

NSW regulators, who seemed ready to allow Crown to open the doors of its gaming floors in Sydney a while ago, are clearly holding off making a final decision until they hear the verdict from Victoria.

The fact is that there have been wholesale changes at Crown with the board and management almost all new blood in response to the Bergin inquiry in NSW which handed down its findings in February as well as major improvements in handling issues such as anti-money laundering practices.

There is still a long way to go and Crown shareholders will be hoping the Finkelstein report is the beginning of the end in the turnaround process for the company and not just the end of the beginning with more turbulence ahead in its home state.

McCann, Halton said, was already in the process of moving to Melbourne, as part of the necessary undertakings for Victorian authorities, a condition which Finkelstein specifically pointed out during his hearings.

Interestingly McCann revealed that Crown had been able to negotiate a $150m financing deal with a major industry super fund as part of its refinancing process in addition to another $250m facility from a major bank.

“We are in very good shape financially,” McCann said. “We are expecting to return to a positive cash flow and maintain a strong balance sheet position.”

Halton admitted shareholders were angry at payments made to outgoing executives including former chief Ken Barton. But she argued they were necessary under contracts negotiated years ago but the board would be taking a much tougher view of payouts in future.

“That horse has bolted,” she said.

The board is now focusing on the future, was her clear message.

The only person still on the Crown board who was on it a year ago, Halton, a former senior public servant, made it clear she is only too willing to step down from the hot seat and back out of the spotlight in her original role as a non-executive director once Switkowski is given the seal of approval by regulators in three states.

That will mean Crown has both a chair and CEO who are tough, seasoned corporate executives with extensive experience running major companies as well as dealing with government and regulators.

The meeting also revealed that the board has had no contact with major shareholder James Packer for some time.

Los Angeles-based Packer is wisely holding his tongue, knowing that any comment he may make, despite his major shareholding, will be seen as unwanted interference in the way the company is being run.