Investors revolt against the election of ex-Crown boss Steve McCann to Scentre’s board

The owner of the local Westfield empire, Scentre Group, faces investor opposition over plans to elect former Crown Resorts chief Steve McCann to its board.

Scentre Group director Steve McCann. Picture: Luis Enrique Ascui

The owner of the local Westfield empire, Scentre Group, is facing mounting opposition from investors over plans to elect former Crown Resorts chief executive Steve McCann to its board.

Major property funds manager Resolution Capital is against his election, which will be voted on at Scentre’s annual meeting this week.

His nomination has also drawn fire from the Australian Shareholders Association, which has argued his experience – including 12 years running Lendlease – was not strong enough for him to join Scentre’s board.

ASA chief executive Rachel Waterhouse has accused the company’s directors of overseeing an “erosion” of investor value.

But two major proxy houses are supporting his appointment, with ISS providing qualified support and Glass Lewis backing his election.

Resolution Capital cited Mr McCann’s record in running Lendlease and disclosure issues as the company suffered heavy losses after shifting into engineering.

The manager, led by veteran funds manager Andrew Parsons, said Mr McCann was an “inappropriate choice” for the board role.

“This position is based on his track record of demonstrating ineffective corporate strategy and execution as CEO of Lendlease,” Resolution Capital said.

It said that during Mr McCann’s tenure at Lendlease a “fundamentally poor” decision to invest in civil construction resulted in the high risk and low margin business significantly altering the overall risk profile.

Scentre Group chair Brian Schwartz. Picture: Christian Gilles

“The manner in which the company finally disclosed the difficulties and losses in the engineering business was characterised by delay, a lack of transparency and selective disclosure about project delays and losses,” Resolution Capital said.

It said Mr McCann was also unable to capitalise on being chief executive in one of the strongest residential cycles in memory, with Lendlease’s earnings failing to deliver commensurate returns.

Resolution Capital harked back to the controversial appointment of former AMP chair Catherine Brenner to the Scentre board, which it also opposed, saying the latest move was another “poor choice” by Scentre chair Brian Schwartz and the board nominating committee.

Mr Schwartz last year cited Mr McCann’s “extensive experience” in real estate, investment banking, capital markets, and customer focused businesses when he was appointed to the board.

“Steve’s skills will complement and strengthen the skills of the board in our oversight of the group, and we welcome him as a valuable addition to the board,” he said.

Other fund managers have also raised objections ahead of Mr McCann facing election.

“On the back of Lendlease’s poor track record of transparency under the then CEO’s watch, I too question Steve McCann’s nomination and election to the board of Scentre Group,” Sequoia Asset Management investment manager Winston Sammut said.

Proxy adviser ISS recommended a qualified vote for Mr McCann, noting that when he was CEO of Lendlease there were governance and performance failures, which led to substantial share price depreciation and shareholder value destruction.

It also backed a qualified vote for the remuneration report.

Scentre declined to comment.