Compare and contrast Nine chairman Peter Costello’s apparent unwillingness to take responsibility for the scandal surrounding the termination payout to ex-Nine news director Darren Wick with the leadership shown by David Murray and John Fraser at AMP over the Boe Pahari affair.
Murray and Fraser resigned as chair of AMP and AMP Capital respectively when a media storm erupted over Pahari’s appointment as CEO of AMP Capital despite a vastly weaker case against them, and Pahari for that matter. The case against Pahari rested on a single, hotly contested incident which had occurred several years before his promotion. The chairs of AMP and its asset management subsidiary AMP Capital were at the time of the critical incident, both women, Catherine Brenner and Vanessa Wallace. They presided over a detailed and textbook investigation into the matter, featuring law firms and a QC, which led AMP to conclude that, despite residual dispute about the facts, Pahari should be severely disciplined but not sacked.
It certainly seems that Pahari was never told his papers had been marked “never to be promoted” because he took his medicine, paid his dues and continued to perform a stellar role at AMP Capital. Indeed, the likely assumption is that he would not have stayed at AMP unless he thought, on reasonable grounds, that if he kept his nose clean, promotion would one day be possible. Murray and Fraser were certainly entitled to assume that Pahari should not be punished twice for the same offence when he came up for promotion several years after the alleged event.
Critically unlike Wick, there does not seem to have been any credible evidence of repeated misconduct by Pahari. Murray and Fraser undoubtedly had a much better case for toughing out the media criticism than the Nine Board but chose to do the honourable thing and resign when it became clear the storm was damaging AMP.
It is true that we need to be wary about conducting witch hunts and demanding heads roll just because of media noise. After all, sometimes the facts do not justify the noise. We also need to ensure we do not make these high-profile corporate jobs the kinds of pariah positions no talented person will take and we certainly need to ensure corporate governance does not become the modern equivalent of a day at the Colosseum.
However, by refusing to address what are demonstrably fair concerns and legitimate questions, Costello and the Nine board certainly appear to be acknowledging they have a case to answer. Time to answer it, Mr Costello.
Costello has been on the board for 11 years, in the top job for eight years, in these feted leadership positions when Wick was allegedly misbehaving, allegedly behaving like a sexual predator. Even Nine papers have reported that Wick’s alleged mistreatment of women, brazenly groping them in front of colleagues, was an “open secret.” The Australian has reported there are a dozen harassment allegations against Nine’s ex-news director, dating back years.
At a staff meeting late last month, where Nine CEO Mike Sneesby announced an external review, he admitted to “alleged serious failings of leadership in television news.”
Sneesby is surely in trouble. But the alleged failings of leadership sit, ultimately, with the board.
As chairman, Costello is responsible for Sneesby’s appointment as Nine CEO in 2021. Costello was chairman when Sneesby signed off on a reported termination payment around $1m to Wick. The board reportedly knew about Wick’s misconduct. Some members of the board were reportedly unhappy with the payment.
As chairman, if Costello didn’t know about the massive termination payment funded effectively by Nine shareholders and agreed to by Sneesby, then he should have known. Costello should have been asking lots of questions of Sneesby, insisting that he be told about any potential termination package given Wick was leaving under a dirty big cloud.
A Nine spokeswoman has said Costello and the Nine board “did not sign off on the settlement with Darren Wick; it was handled within our governance processes.”
Seriously? That’s a whole lot of guff. What kind of mickey mouse corporate governance systems does Nine have? Every board member is responsible for this farcical governance failure.
But in the end the buck stops with the chairman. If Costello doesn’t understand good governance, then he should have taken a course on it before he joined the board, let alone before he became chairman.
In a major listed company, the rules are simple: No CEO should be able to sack their direct report and gift them a big payout on their own. It’s called the executive once removed rule. A senior executive should get approval for a big payout, especially when paid under a cloud of alleged misconduct, from the person they report to.
Wick reported to Sneesby. Sneesby reports to the board. The board should have known. Costello should have known.
Shareholders should be appalled. And they are. The share price has tanked under Costello. When Mr Sneesby’s appointment was announced on March 3, 2021, the company’s share price was $3.07 per share. Today it’s languishing at $1.42.
It’s not as if, under Costello’s leadership, the former Fairfax papers covered themself in glory. The airport collision isn’t the last straw. That straw came and went long ago.
As a former politician, he should know if there’s a cover up, that’s what kills you.
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