STRONGER CORPORATE GOVERNANCE

The NRMA is a members’ mutual, a co-operative company owned by its members,
whose sole reason for existence is to provide benefits to its members by sharing out the profits it earns.

The difference between a mutual and a shareholder company could not be more stark.

The philosophy of “service to members before self” must be the only culture in the NRMA, understood and practiced by every employee.

• NRMA managers must lead by example.

Directors in particular have a special responsibility to formulate and actively manage policies

to ensure that members’ rights and benefits come first.

NRMA company rules must ensure that the business of the mutual is transparent

and that there are accessible mechanisms for members to hold the Directors accountable for their actions (and inaction) without recourse to complex and expensive legal processes.
The NRMA needs stronger rules in its constitution to limit the powers of Directors over their own remuneration and self perpetuation.

REMUNERATION in particular of Directors

ELECTION OF DIRECTORS

TRANSPARENCY OF BUSINESS

RESOLUTIONS FOR MEETINGS OF M EMBERS

PROXY VOTING FOR MEETINGS OF MEMBERS

VOTING AND CONDUCT OF ANY VOTE WITH PROXIES OR AN ELECTION

CONDUCT OF MEETINGS AND COUNTING OF VOTES


REMUNERATION in particular of Directors

This fee increase is wrong.

These have been monumentally abused.

Amend the constitution to ban the practice of providing credit or loans of any type to Directors

Amend the constitution to limit the powers of directors to approve termination pay exceeding the legal entitlement of any employees including executive bonus schemes and salaries exceeding member approved limits

The total remuneration of NRMA Directors should be declared and limited to the member approved limits set out in the constitution.

Directors must be fairly remunerated for their work but all fees or other benefits earned from any activity for the company must be properly and transparently accounted for, published and first approved by the members.

ELECTION OF DIRECTORS

The 2003 Turnbull constitution, amongst other things entrenched the power of non-elected incumbent directors and must be reformed to restore balance and the rights of members:

Members must have the power to elect all Directors.

This fundamental right was removed by the 2003 Turnbull constitution. The"regional" elections limit members to voting for only one of 9 directors. This is wrong. No other company in Australia, mutual or otherwise limits its members in this way.

Retain regional responsibilities for directors but remove Regional voting

The regional system is fatally flawed because it places directors in a situation of conflict between their responsibilities to the members and company as a whole and those of their regional constituencies.

The idea of Directors having special responsibilities for a region is sound however their overriding responsibility under the Corporations Act is to manage the business of the mutual for all the members.

No special acknowledgement in any electoral information nor mark on the ballot paperto distinguish whether a person standing for election is currently a director.

This practice was discontinued by the NRMA following the Street Commisssion Report into corporate governance at NRMA, published in the Oct/Nov edition of the OPEN ROAD in 1992. It   was found to be undemocratic, entrenching the power and office of incumbent directors.

The Turnbull constitution overturned the ban (without specifically advising members of this significant change) allowing incumbent directors a right to have a mark placed next to and so highlighting their name on ballot papers with a footnote to say they are directors at the time of nomination.

It is wrong, unfair, undemocratic and must be banned.

No incumbent Director shall use the resources of the company nor power of their office to draw attention to themselves or provide special advantage over other members during the election period or within 6 months prior.

Directors have a special responsibility.

The Advance Bank Vs FAI case provides guidance: in his summary Kirby J stated:

" 5. Whilst there is no special rule governing the authority of directors in connection with elections or proxy solicitation, the heightened risk of a confusion between private interest and the best interests of the corporation (or corporate purposes) requires scrupulous conduct on the part of directors. It necessitates particular care where that conduct has the effect of influencing the outcome of an election in favour of themselves or their colleagues."

And;

"7. In determining the "corporate purpose", a court must characterise conduct which will often have mixed purposes. It should be vigilant for ulterior purposes of private advantage. But in the end, what is required is a classification of the conduct of the directors, by reference to the real purposes
which primarily motivate their actions. "

NRMA directors, as managers of a mutual must demonstrate the highest standards in this regard.

Directors must not be appointed to fill a casual vacancy on the board unless they have offered themselves for election at the previous Board of Directors election, and that they polled the next highest aggregate number of votes to those currently elected.

Directors must be limited in their appointment of directors. The undemocratic practice of filling board vacancies with people sympathetic to the views of the sitting board must stop to prevent the practice so often used in the past at the NRMA of entrenching board power through a revolving door of board appointments.

 

TRANSPARENCY OF BUSINESS

•  The Directors shall publish all matters relevant to the operation of the business to the members on request

other than matters which are commercially confident and could, if released affect the profit of the business or future profits.

•  Detailed accounts must be published

to ensure that members have an opportunity to freely explore and understand where and how their funds are being applied for their benefit. The practice of publishing the mininimum required by law must be abolished to increase the accountability of the directors and management to the members.

•  A register of consultants shall be available for member inspection.

RESOLUTIONS FOR MEETINGS of MEMBERS

•  Each and every individual proposed constitutional change shall be fully particularised in detail

and its impact properly explained in simple plain English understandable by the nearly 2 million members. It shall not be allowable for "bulk changes" to be introduced (like the Turnbull 2003 changes) which require members to find the individual changes and to determine their impact.

•  No proposal shall be put to the members which would require them to individually seek legal advice as to the implication of the changes.

•  There shall be no preference given to the publicity for or against any outcome of proposals

•  Any resolution for changes to the affairs of the company or its constitution proposed by the Directors

shall be also provided with a clear and independent case, for not making the change written in simple plain English, understandable by the 2 million members submitted by an independent committee and experts not influenced by the board.

•  The independent committee shall be select in a transparent manner

perhaps the five members who stood for election and gained the next most votes at the previous Board election but were not elected to the Board. This committee shall be given the powers to engage legal and other experts as required on behalf of the company to investigate and consider all member submissions and to publish their recommendations free of influence from the company or its board.

•  No resolution shall be placed before the members without a reasonable time for proper consideration and public debate,

notice being not less than 6 months for any constitutional changes or changes in remuneration or other conditions for directors and managers.

PROXY VOTING FOR MEETINGS OF MEMBERS
SECURING THE USE OF PROXY VOTES PREVENT ABUSE

•  The Electoral Act does not apply to the affairs of companies

and votes taken by members of companies. Unlike the Electoral Act, Corporations law makes few demands on companies to ensure that the use of proxy votes is secure, accountable and fair.

•  Companies are left to themselves to decide how to conduct elections and votes for meetings.

•  A proxy vote cast under the present rules set out in Corporations Law is not secure.

Unless the constitution of a company provides specific limitations, there is nothing to prevent directors from abusing the proxy voting system to achieve changes which could not be achieved under the rules of the Electoral Act.

•  The NRMA, with its widely held membership representing nearly every household in NSW has a special responsibility

to ensure that its practices are stringently controlled to ensure and guarantee voter confidence and eliminate abuse.

Providing that they are not contrary to any law, the following reforms are required:

VOTING AND THE CONDUCT OF ANY VOTE WITH PROXIES OR AN ELECTION

•  An independent returning officer shall conduct the ballot which shall be secret.

•  The returning officer shall conduct the election so as to guarantee the same level of probity and security as required for elections under the Electoral Act.

•  Only verifiable, auditable registered voting forms individually identifiable and traceable to a member are to be counted.

•  The use of blank proxy votes (allowable under the Corporations Act) published in the media or otherwise distributed is to be specifically banned.

•  No proxy voting form should bear any device, mark or other method of "steering" the vote toward one outcome or another

•  A proxy shall only be available for the member to direct their proxy to a specific person.

•  Proxy voting forms shall not be designed to allow a default vote to be directed to any member.

•  A default vote shall not be directed to the chairman of the meeting

•  The chairman of the meeting shall not be given any specific advantage to gather proxies or exercise them other than in his normal right as a member.


CONDUCT OF MEETINGS AND COUNTING OF VOTES

•  The chairman may not vote or cast proxy votes

if the outcome of the vote would provide him personally or the office he holds (other than as chairman of the meeting) within the company any advantage whatsoever.

•  The eligibility of any vote shall be determined by the independent returning officer, NOT the the chairman of the meeting.

•  The returning officer's decision shall be final

and he shall make public the results of the ballot at the same time that it advises the company secretary and pulished on the Company's website.

•  A resolution to Demutualise the company must be endorsed by 75% of the members in a secret and secure ballot in addition to any other requirements imposed by the Corporations Act.

The returning officer's decision shall be final

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