16

The Departed

I’ve always said I’ll do one more term. I’m not going anywhere.

Ron Walker, December 2008

If John Fairfax and Ron Walker were poor cultural fits, Brian McCarthy and David Kirk took the mismatch even further. They were polar opposites—the gruff, straight-talking newspaper production man from Newcastle versus the Oxford-graduated, medically trained Rugby hero from New Zealand. McCarthy prided himself on being a hard worker who kept a low social profile. Kirk could be blokey, but he was also comfortable schmoozing with the big end of town.

McCarthy had run his own show at Rural Press, and had run it well—the financial institutions loved him because he kept costs low. The Rural Press culture was quite hierarchical. It was not a bullying culture, but the executives were treated with a great deal of respect. That was not the case at Fairfax, where the prevailing journalistic culture was to treat management with a hefty measure of scepticism. McCarthy’s naturally grumpy demeanour had worked well at Rural Press but it worked against him in the newsrooms at Fairfax. He bristled at the lack of respect, but most of all he hated being number two, particularly to someone who hadn’t worked in newspapers before. And he wasn’t keeping quiet about it. He told Neil Shoebridge of the Fin Review, ‘There are times when not being chief executive gets a little frustrating, not because of David, but because I’m not the ultimate decision maker’.

Fund managers were given a front-row seat at the Kirk–McCarthy clash. When the two Fairfax executives made their rounds of the institutions in early 2008, the body language was unmistakable. ‘These guys hated one another’, one fund manager recalls. ‘McCarthy had been in the job nine months and he let it drop that he hadn’t signed his contract yet. We thought, “Whoa, what is going on here?”’.

The antipathy was so blatant that the board began to discuss the clash of personalities between the top two executives. There was a lot of sympathy for Kirk. ‘Kirk became so isolated’, recalls one insider. ‘They [the former Rural Press executives] almost built a wall around his office. He couldn’t get out. He became unable to talk to anybody. McCarthy and his men just joked about him and put him down. It was their way of dealing with everybody.’ Suddenly, the Rural Press deal started looking like a big mistake, at least in terms of the Fairfax culture, to some longstanding board members.

The Fairfaxes saw it differently. They perceived Kirk as a man who was not in touch with staff, who was stuck behind his desk, spending most of his time in his office—through his own choice. He wasn’t focused on efficiency. They thought he needed a good kick in the arse. Of course, the Rural Press team’s harsh assessment of Kirk was skewed to fit their own agenda. They wanted control and they wanted their own man in the top job. The editors and journalists actually liked Kirk. He treated them with respect and was comfortable sharing a late-night beer at company functions.

As for Kirk himself, he remembers his best and worst times at Fairfax as occurring on the newsroom floor. The best experience was joining in the celebratory drinks when the Fin Review journalist Morgan Mellish won a Walkley Award for his investigation of the tax affairs of Reserve Bank board member Robert Gerard, which led to Gerard’s resignation. It was good old-fashioned journalism—digging through land titles and company records, wearing down the shoe leather. The worst experience for Kirk was helping colleagues and family deal with their grief when Mellish, thirty-six, was killed in a plane crash in Indonesia while covering a visit from then foreign minister Alexander Downer.

On the business front, too, Kirk was gaining respect. He already had runs on the board—the Trade Me purchase and the Rural Press takeover were Kirk’s achievements. If he appeared not to be hands-on, there was probably a reason for that. Since the Rural Press merger, McCarthy had assumed control of all Australian publishing operations except for the Financial Review Group and Fairfax Digital. Kirk fostered that sense of control for McCarthy. He wanted McCarthy to feel comfortable at Fairfax, understanding how difficult it was to move from being a chief executive to a deputy CEO. With the benefit of hindsight, Kirk should have reined McCarthy in and brought the personality clash to a head early on. But he didn’t.

The chasm between Kirk and the Fairfax family was partly about personalities, but it was mostly about strategy—in particular, the development of strategy for Fairfax that was Kirk’s key role. Kirk, like Walker, was an expansionist. He saw the future of Fairfax through the prism of growth, principally acquisitions. In his first two years in the chief executive’s office, he spent over $4 billion on new assets, including Trade Me, Rural Press, Southern Cross Broadcasting, the Border Morning Mail and a number of websites. He was also looking globally, assessing internet assets in India, for example, during 2008. Again like Walker, he was ambitious about the future of Fairfax—he had an open mind and was alert to opportunities. The Fairfaxes, however, saw it as a case of ‘deal frenzy’.

And then there was the global financial crisis. As 2008 rolled on, with credit markets drying up, the impact of the crisis finally being felt in Australia, and the global devastation being revealed, the rift between the Fairfaxes and the Walker–Kirk faction on the board deepened.

Nick Fairfax and Patrick Joyce, the investment manager of Marinya, undertook a global study tour of the media industry during that year. They visited the chief executives of thirty newspaper companies in the United States and Europe. Before they left Australia, they had a preconceived notion that the US newspaper industry had been mismanaged, but that was to be challenged. ‘We thought they had done the wrong thing, responding to declining circulation by cutting staff, which affected the quality of the paper and put them in a death spiral’, Patrick Joyce says today. ‘But we came away thinking that the US managers were actually quite good, [that] this was much more structural than we had envisaged.’

They also took away positives from the trip. They were reassured that Australia had a genuine regional newspaper industry, and that these papers would take longer to be affected by structural change. Also, the big global ‘pure internet’ players would probably find the Australian market too small. These niche enterprises were threatening the revenue base of industry stalwarts like The New York Times, for example, by providing more in-depth coverage of sports and food and politics. But in Australia, the best political coverage and the best sports coverage was still in the metro newspapers. The Good Food Guide, published by The Age in Melbourne and the SMH in Sydney, which ranked each city’s best restaurants, was still tops in its field. Fairfax and Joyce realised that Fairfax could overcome all these challenges, but its strategy had to change. The structural change it was facing in the newspaper industry was mammoth. Australia still hadn’t felt the full force of it. The company had to be ready—it had to deleverage, deal with the cost base, integrate the assets and integrate sales. And Walker and Kirk would probably have to go.

During the second half of 2008, the Fairfax family agitation at board level was taken up a notch. John B and Nick stressed the need to reduce costs and pay off debt. Fairfax needed to have a capital raising—it should issue more shares. It was fine to talk about the future in terms of the internet, but there would be no future unless the board dealt with the basics. However, it was seven versus two—the Fairfaxes were on their own in the boardroom. So they tried another strategy. They reached out to other shareholders, to the institutions. Both Kirk and Walker were in their sights, but the chief executive was going to be targeted first.

Patrick Joyce, and Mark Johnson, one of the doyens of Australian investment banking and now an adviser to Marinya, began visiting Fairfax’s key shareholders in mid-November. They wanted pressure to be put on the board to get rid of Kirk and replace him with McCarthy. They urged the fund managers to write letters to the board, to ring Walker and tell him of their concerns. It was an audacious tactic and Marinya treated it like a military campaign.

There was clearly a large degree of self-interest in the strategy. John B had lost a lot of money since he’d bought out his siblings. In January 2008, the Fairfax share price was $4.29; by early November, it was languishing at $1.53, a fifteen-year low. John B had seen at least $600 million of his wealth disappear. And the kicker was that Marinya had a plan to save Fairfax but the board was ignoring it. To be fair to Kirk, he had announced cost cuts during 2008—there were 550 redundancies among Fairfax staff, including 165 journalists, which was 5 per cent of the workforce. The savings would amount to $50 million a year. But the Fairfaxes, and, increasingly, other key shareholders, wanted more.

The company’s 2008 annual general meeting was held in Melbourne on 13 November. Kirk told the shareholders that he wouldn’t be making profit forecasts for the coming year—it had been a bad start, with earnings down 15 per cent in the first quarter. Walker was similarly downbeat. ‘We foresee tough trading conditions for some time’, he said. This came as no surprise to John B and Nick Fairfax. But they were angry at what came next. Kirk told shareholders there would be no further cost cutting. And then, Walker said he was staying on for another four years as chairman because he ‘still had a lot to offer’. To top it all off, John B then had to assure shareholders he had no margin loans over his Fairfax shares. It was humiliating.

The Fairfaxes felt they had no choice but to up the ante. They hired one of Sydney’s top public relations consultants, Sue Cato, to help with their campaign to get rid of Kirk. Then, in the last two weeks of November, five key shareholders with a combined holding of just over 33 per cent of Fairfax coordinated their actions, writing to Walker to urge Kirk’s removal. They were Marinya, Maple Brown Abbott, Colonial First State, Lazard Asset Management and Investors Mutual. Walker had to act. He organised his own tour of the institutions, taking with him Roger Corbett and fellow board member Peter Young. It was clear that a level of antipathy towards Kirk had been whipped up by the Fairfaxes and their advisers.

On 27 November, an unscheduled board meeting of Fairfax directors was held at the offices of Investec at Chifley Square in Sydney’s CBD, where Roger Corbett conducted his business. All the directors were present except for David Kirk. He was in Melbourne that day addressing Age staff. But that’s not why Kirk didn’t attend. He hadn’t been asked—the meeting was held to discuss his future.

In the days leading up to the meeting, Fairfax’s share price hit a low of $1.11. There was a wave of short selling, with stock market traders punting on a fall in the share price and, in the process pushing the price down further. News of the discontent on the board had reached the big stock market investors, which is hardly surprising given the number of board members and their acolytes traipsing the streets to talk to the institutions. There were rumours of a capital raising. The stock exchange queried Fairfax about the unusual level of activity. The company waved off the concerns, telling the stock exchange that the rumours were unfounded and that Fairfax had no need to raise equity.

At the unscheduled meeting, Walker and the rest of the board, with the obvious exception of John B and Nick Fairfax, continued to back Kirk, although they recognised there was a problem if he had lost the support of the financial institutions. Details of the directors’ discussion appeared in The Australian the next morning—another board leak.

Kirk decided it was time to do some lobbying of his own. Over the next few days, he and Roger Corbett visited the key institutions to put forward the chief executive’s case. With Kirk in front of them, the institutional investors were in a quandary. They admitted that he had done a good job in broadening the asset base of Fairfax. The Trade Me and Rural Press purchases had been strong deals. And they had nothing against him personally. But if a 15 per cent shareholder was going to take this battle to the wire, there was not much they could do to alleviate the problem.

And take it to the wire John B did. He just kept increasing the pressure. On 3 December he wrote a letter to Walker that was copied to all the other directors. In it, he summarised the shareholders’ concerns.

Fairfax has engaged in an acquisition strategy at the top of the market that, whilst achieving diversification, has come at a high cost. The company must enter an extended phase of focusing on its internal operations to ensure it integrates and optimises all its assets to drive cash flow and earnings per share growth. The company has too much debt, particularly in the current environment, and must commit to reducing debt as a matter of priority … This is a strategic path requiring a leader with a track record of operational focus and excellence … David Kirk should be replaced with Brian McCarthy as CEO.

Two days later, Kirk resigned, telling Walker he was ‘sick of the industry’. John B Fairfax had won.

That evening, David Kirk received a telephone call at his home. It was John B. He said he was sorry that Kirk had resigned. Kirk was stunned. He told John B that he had every right to have an opinion about who should be chief executive, but for him not to have the courage to express that view directly to Kirk, and to send people out to talk in the marketplace to undermine him, was not good behaviour. John B replied that he didn’t think it had been his place to confront Kirk. That was how the conversation ended.

Within a week, Brian McCarthy was named as the new chief executive of Fairfax. In the company statement announcing the appointment, Walker was gracious: ‘Mr McCarthy is the right person with the right experience at this time to run the company’. And then came a surprise: ‘The board announced today its unanimous support [for the chairman] and acknowledged the great contribution he continues to make to the company’. Walker subsequently told the Fin Review: ‘I’ve always said I’ll do one more term. I’m not going anywhere’. The Fairfaxes were not overly concerned. They had their first scalp, and they were prepared to wait for the next one.

In his three years at Fairfax, Kirk had established a tradition of inviting the whole Fairfax board and the key executives of the company to his Hunters Hill home on Sydney’s north shore for Christmas drinks. As it turned out, the 2008 event was scheduled to take place a few days after his resignation. The invitations had already gone out, so Kirk and his wife Brigit decided to go ahead with the party. It would be a type of farewell to the people he had worked so closely with.

The Christmas party had been underway for about an hour when silence descended on the room. John B and Nick Fairfax and Brian McCarthy, the executioners, had arrived. They were undoubtedly being polite—they had been invited, and the other directors and executives were going, so they should turn up. But it was the wrong call. The trio stayed for over an hour and Kirk handled it graciously, but the party atmosphere dissipated and conversation was strained. When the Rural Press team finally left, Brigit thanked them for coming and then said to John B, ‘I don’t suppose I will ever be seeing you again’. His reply: ‘Oh, don’t be like that’.

Brian McCarthy didn’t have much of a Christmas break that year. He had the top job now and he was ready to clear the decks. The half-yearly accounts would be a good starting point. Fairfax needed to clean up its balance sheet, specifically write down asset values, raise new capital and put some assets up for sale. The dividend strategy was absurd. Fairfax had stuck to its policy of paying out 80 per cent of net earnings as dividends across the economic cycle. With the collapse in the share price, that meant Fairfax’s dividend yield was a ludicrous 18 per cent. Yet Walker had told shareholders at the recent general meeting that he saw no need for a change. They were all in for a shock.

When Fairfax’s half-yearly results were announced in February, barely two months after McCarthy had taken over, a $365 million loss, including $540 million in writedowns and restructuring costs, came to light. Excluding the writedowns, normalised net profit was not a happy picture either—down 23 per cent year on year to $157 million. Fairfax had finally managed to sell the Southern Star production studios in January (part of the Southern Cross radio transaction in 2007) and booked a $30 million loss. The dividend to shareholders was down by 80 per cent, from 10 cents a share to 2 cents a share.

Four days after the announcement of the loss and the slashed dividend, Fairfax declared a $620 million capital raising. John B and Nick Fairfax professed to be happy about this, and they were—it had to be done. But they were angry about the timing. It had been left too late. Fairfax could have had a capital raising a year earlier, when the share price was closer to $4. Now they were raising capital at 75 cents a share. They were giving them away. And in the process it would reduce the Fairfax family’s stake in the company by more than one-third.

The Fairfaxes were already stretched financially because of the buyout of the family’s interest in Marinya twelve months earlier. It would not be prudent to borrow further to participate in the capital raising. Instead, they took up only 12 per cent of their entitlement. Their shareholding in Fairfax was diluted from over 14.6 per cent to 9.7 per cent. It was a big hit. But at least McCarthy was in charge, John B and Nick told themselves. Things had to improve.

There were more structural changes coming. In March 2009, a month after the capital raising, McCarthy announced that he was integrating the print and online sales divisions across the company. Jack Matthews, head of Fairfax Digital, would no longer have responsibility for online classifieds for the metro newspapers. This would now be managed by the publishers of the SMH and The Age—Lloyd Whish Wilson, part of the former Rural Press team, and Don Churchill. Two key executives also departed in the first few months of McCarthy’s reign—the chief financial officer, Sankar Narayan, and the head of New Zealand operations, Joan Withers. Both were replaced by former Rural Press executives.

McCarthy was making quite a splash. There was little doubt that the old Rural Press brigade now ran the company’s day-to-day business. But it was a different story at the board level, where the old guard, led by Ron Walker, was still in charge. John B should have taken note of an old adage—you can’t half-kill the king.

McCarthy was battening down the hatches on costs and debt. But he was having little success on the revenue side. In the first half of 2009, advertising revenue plunged by 25 per cent year on year, partly because of a downturn in the economy and partly because advertisers were deserting print in favour of online business. It was a disaster. When the full-year financial results were released in August, the extent of the carnage became clear. The earnings of the metro newspapers were down by 46 per cent over the year. But even more worrying was the fact that the slide was accelerating. In the second half of the year, the decline was a massive 73 per cent.

The net loss for the year was a sobering $380 million compared with the $386 million profit earned the year before, though it did include the half a billion dollars–plus of writedowns that McCarthy had made in his grand gestures in the first half of 2009. The predicted structural change in the newsprint industry had hit and the online trade wasn’t taking up the slack. Online revenues went up 6.4 per cent during the year but still accounted for only 10.2 per cent of group revenue. Shareholders were told that Fairfax would not be paying a final dividend. As a result, John B’s Marinya Media missed out on $22.8 million in income. All the shareholders were suffering.

While fund managers were absorbing the bad news, they were unaware that the battle in the boardroom had gotten worse. Any hope that the tensions would be solved by the departure of Kirk and the appointment of McCarthy had proven delusional. John B remained determined that Walker should go.

It was at the May board meeting, on the second anniversary of John B’s arrival, that he dropped his bombshell. He moved a motion that the board immediately appoint an executive search firm to begin looking for a new chairman. John B said that as Ron Walker’s term was up in November, he should step down at the company’s AGM and that the hunt for his replacement should commence immediately. The motion was defeated, but Walker was stunned and so were the independent directors. The atmosphere in the boardroom was poisonous. John B’s only supporters were his son Nick and Brian McCarthy, who had become a director after taking over as chief executive. On Walker’s side were Julia King, Roger Corbett, David Evans, Peter Young and Bob Savage (who’d been appointed in June 2007)—the rest of the board.

John B has always denied wanting the Fairfax chairmanship, but it is tempting to believe that this was the end game—if the numbers stacked up. After all, there had already been one clear victory—the resignation of Kirk and the anointment of Brian McCarthy as chief executive. Key institutional shareholders had backed John B in that battle. Perhaps he thought he could pull it off again. But if so, John B had a big problem, apart from the fact that he’d alienated most of the board. Ron Walker already had a succession plan—Roger Corbett.

Corbett had stepped down as chief executive of Woolworths in 2006 after being universally lauded for turning the retailer around. He was now on the board of the Reserve Bank of Australia and had also joined the board of the giant US retailer Walmart. His corporate credentials were impeccable. But he was not a popular director at Fairfax. A number of the other board members found him aggressive and arrogant, with a tendency to dominate proceedings.

John B had had a number of run-ins with him. On one occasion, Corbett told John B across the board table: ‘Don’t you lecture me!’ John B had approached Walker about it afterwards, saying, ‘That was a shocking way for Corbett to behave’. Other directors had complained about Corbett’s constant harping on about his experiences at Woolworths. One says, ‘We heard more about the Woolies store in Manly than we did about Fairfax. He would go on and on’. Another director points to the lack of control over Corbett during board meetings as one of Walker’s failings as chairman: ‘He allowed Roger Corbett to behave appallingly. He was just bombastic and rude and dominated the meetings. He put people down’.

The truth was that Corbett and Walker were practically joined at the hip. On the board, Corbett was seen as Walker’s attack dog—and the chairman’s protector when he himself came under attack. And this continued to happen as 2009 marched on. John B wasn’t giving up. In late May, he followed up his defeated motion to appoint an executive search firm with a letter to Walker and the board outlining his concerns.

Bob Savage approached John B for an off-the-record chat. Savage was the chairman of David Jones and the financial services group Perpetual. He was a well-respected business figure. Perhaps he thought he could mediate between the warring parties. He asked John B to outline his problems and they talked through the list of concerns. John B thought one solution would be for Savage to become the new chairman and he was prepared to put Marinya’s support behind the change. But at the next board meeting, John B became convinced that Savage had discussed their talk with the other board members. There was an ugly altercation. John B accused Savage of lying, and he was then berated by Corbett for doing so. The Fairfaxes concluded that Corbett was behind Savage—they were on their own again.

In mid-August, John B wrote yet another letter to Walker, renewing his call for the chairman to stand down at the November AGM. He copied in the independent directors. Their response was to hit back. On the day before the August board meeting, the last before the announcement of Fairfax’s dismal profit results for the year, the independent directors gathered for dinner. They agreed on a statement setting out their support for Walker to remain chairman. The plan was to send this letter out to shareholders with the notice of the AGM. Until then, they would keep it quiet. Meanwhile, the following day, they had a surprise for John B and Nick Fairfax. The position of deputy chair had been left vacant since Mark Burrows’ departure eighteen months earlier. But Walker had now decided to put Corbett in as deputy chair. The game was hotting up—and not just in the boardroom. John B had been canvassing shareholders and was convinced he had the support of at least 40 per cent of them to force Walker to stand down. Sue Cato had been retained once again to advise on the public relations strategy. If there was going to be a public showdown, the Fairfaxes would be ready.

On 15 September, John B requested a meeting with Walker in the chairman’s private office on Albert Road in the Melbourne bayside suburb of St Kilda. Surrounded by Formula One memorabilia and photos of Walker posing with various politicians, John B announced that Marinya would not vote for Walker at the AGM. The rest of his message was equally succinct: ‘Don’t stand for re-election. This is suicide. The shareholders are not going to vote for you. This is going to hurt the company. Stand down’. Walker was furious. He would buy out Marinya, he said. He would pay a premium of 5 per cent over market price (about $387 million all up) for the Fairfax stake and would settle in fourteen days. John B dismissed it as hot air, but it showed how much Walker wanted to keep the Fairfax chairmanship—he was prepared to pay hundreds of millions of dollars for it.

The confrontation with John B was probably enough on its own to jolt Walker into action. But if it wasn’t, a small item that appeared in the Fin Review’s ‘Street Talk’ column the very next morning decided the matter. The newspaper hinted that certain institutional shareholders had decided not to back Walker for re-election to the Fairfax board.

Walker’s response was to give an exclusive briefing to the Fin Review. The story did not make page one—it materialised on page fifteen. But its impact was still tremendous.

Ron Walker has moved to end speculation about his future as chairman of Fairfax Media. Mr Walker outlined his plans after the AFR’s Street Talk column revealed yesterday that some institutional shareholders were keen for him to step down ahead of Fairfax’s annual meeting on November 10.

Mr Walker, who has been chairman since August 2005, was understood to have told his fellow directors at Fairfax’s most recent board meeting in Sydney on August 21 that he would not seek a new three-year term.

The board agreed that Mr Walker should stand for re-election as chairman at the annual meeting before handing over the reins to a new chairman next year.

To the Fairfaxes, this was a fantasy. No such decision had been made. Options had been discussed, including the one Walker had laid out. But there had been no agreement. It was like Bob Hawke’s famous promise to Paul Keating at Kirribilli House that he would hand over the prime ministership within two years. It would never have happened. Ron wasn’t going anywhere.

It took just hours for John B and Nick to retaliate. They issued a statement that was extraordinary for both its speed and its tone. Australian business can be rough-and-tumble and there have been plenty of boardroom battles over the years. But rarely has anything as inflammatory as this emerged from the board of a blue-chip company—or, at least, a company that was once blue-chip. It is worth quoting the statement at length:

After years of underperformance, Fairfax Media has a new management team, a streamlined cost base and is poised to rebuild some of the shareholder value that has been destroyed.

We do not believe the current board under the leadership of Mr Walker meets these tests and for several months we have been urging the board of directors of Fairfax Media to recognise the need for board renewal.

We also consider that inadequate attention has been paid to matters of corporate governance and in our view during the four-year period of Mr Walker’s chairmanship an unacceptable degree of risk was introduced to the company’s capital structure through a series of debt-funded acquisitions …

Marinya, for one, cannot see how Mr Walker’s stated intention to delay his retirement assists the company or its shareholders.

It unnecessarily defers the commencement of the much-needed process of board and leadership renewal and we consider it inappropriate that a departing chairman would be influential in the choice of new directors.

If there was any doubt about whether Marinya was backed by key institutions, this was put to rest by a forthright statement issued the same day by Suellen Morgan, joint investment director of Fairfax shareholder 452 Capital:

We can see no reason for Ron Walker to remain as chairman for another 12 months. Given he has served his term, we think it is the right time to make board changes. It is the ideal time to renew the leadership of the company at a time when it is facing challenges. Brian McCarthy and his management team need a board that is focused and supportive.

452 Capital then wrote to each Fairfax director to say it planned to vote against Walker’s re-election.

During this period, John B had taken to poetry to record his feelings. He told the Fin Review in 2012:

It comes as no surprise to know we were pretty shitty with what was going on there with Ron Walker, and I did write something about that which reflects the way I was feeling at the time. About that time, I’d see Ron driving through [Sydney’s] eastern suburbs in his sports car, top down, hair flying everywhere.

The verse in question was titled ‘Man is a lion’. John B declined to share it with Fin Review readers.

Sunday 20 September was Ron Walker’s seventieth birthday and he briefly retreated from the Fairfax battlefront to hold a celebration at home with his wife, children, grandchildren and close family members. Then, over the next few days, he gauged the temperament of the company’s major shareholders. Whatever he said to them did not impress 452 Capital’s executives. Suellen Morgan said in a statement to the press:

The independent directors should be independent and should be articulating why they believe Ron Walker has led the company with great distinction.

Acquisitions were made at the top of the cycle, which has handicapped the balance sheet. They have too much debt, and despite doing the capital raising, they are in a handicapped position. There is no flexibility. All they can do the next few years is pay down debt.

They need to give more detail on what purpose it serves for Ron Walker to stay for another 10 months. It does put the company in limbo.

He should not be involved in electing new directors, he should not be involved in deciding on a strategy he will not be there to implement. Either he stays another term or he should go now. This halfway house does not make much sense.

By Thursday of that week, Walker was briefing journalists that he had decided to step down. Roger Corbett was attending a Walmart board meeting in the United States, but Walker said that when he returned, they would visit the key institutions together—the ‘Roger for chairman show’, as the press dubbed it. And Walker took a leaf out of the Fairfaxes’ book. Lazards was hired to consult on the Corbett push. Walker says that Corbett paid the bill himself, although newspapers reported at the time that it was on Walker’s tick.

Corbett soon made it clear that he had his own agenda. When he began the round of visits to key shareholders the following week, he was on his own. It was not the double act that Walker had envisaged. The numbers must have been close. Corbett took ten days to gather his forces, but he got over the line.

Perhaps the institutions felt they had gone far enough in backing Marinya to rid the company of Walker and Kirk. Corbett was a well-respected businessman, besides which the idea that a far-reaching search for an independent chairman could be undertaken in the next few weeks, before the November AGM, seemed ludicrous. Corbett also had a fairly potent weapon. He made it clear that the independent directors were behind him. He told at least one fund manager that if he didn’t get the chair, it was likely that the other four independent directors would walk. No shareholders would want that to happen—the share price would tank.

By 8 October, Corbett was ready to meet the Fairfaxes. There was a very stiff meeting in Corbett’s office at Investec, at which the Fairfaxes effectively conceded defeat—they would back Corbett for chairman. It was quick and clinical.

John B and Nick had been successful in wresting management control at Fairfax, but their dream of board renewal was dead. And what of the future for McCarthy? Well, Corbett had never been a supporter.