West Australian Newspapers Holdings Ltd (WAN) has caved in to the demands of its largest shareholder, Seven Network Ltd, and appointed the broadcaster's chairman Kerry Stokes and his right-hand man Peter Gammell to its board.
WAN has until now resisted Seven's repeated requests for board representation to reflect its 22.4 per cent stake, up from its initial purchase of 14.9 per cent in October 2006.
Today's board appointments come five months after WAN shareholders voted against Seven's call to replace almost all the members of the WAN board, including chairman Peter Mansell, and install Mr Stokes and Mr Gammell.
WAN now has eight directors, up from six at the time of the Seven putsch. The board now comprises five independent directors, two Seven representatives, and managing director Ken Steinke.
WAN also said today it would appoint another independent non-executive director, taking its board numbers to nine.
Independent media analyst Peter Cox said WAN was enlarging its board in an attempt to dilute Mr Stokes' influence.
"Presumably, they are trying to boost their numbers so that Stokes has only got two votes," Mr Cox said.
He agreed with Mr Mansell's repeated assertions that Mr Stokes would launch a takeover bid for WAN.
"I think it's a matter of time before Seven ends up taking them over. There's no point in being there otherwise."
Seven increased its stake in WAN to 22.3 per cent in July, up from 19.4 per cent beforehand, but did not launch a takeover, which is usually triggered when a shareholding exceeds 20 per cent.
The broadcaster used the "creep" provision of the Corporations Act that allows it to lift its stake by less than three per cent in each six-month period.
It would take Seven about five years to gain control of WAN using creep provisions.
"Stokes will just keep on increasing his shareholding with the creep provisions and it was inevitable he would get those board positions," Mr Cox said.
"They were just worn down by his persistence."
Mr Cox said Mr Stokes may covet Mr Mansell's role.
He said he agreed with Mr Mansell's belief that the Seven chairman would be a dominating presence on any board, regardless of whether he had control of WAN.
"Kerry only works one way. He only wants to be on the board so he can exert influence.
"As to whether he wants to be chairman or not, only time will tell.
"He won't be any ordinary director on a board, that's for sure.
"He will have a lot more control than that.
"And with a 22.4 per cent stake, he would argue that he's got the biggest financial investment (in WAN) than anybody else on that board.
"The question now is ... whether the (WAN) chairman survives or not.
"I think we're seeing the changing of the guard."
As required by WAN's constitution, Mr Stokes, Mr Gammell and Doug Flynn - who was appointed to WAN's board last month to replace outgoing non-executive director Erich Fraunschiel - will each stand for re-election at WAN's annual general meeting on November 5.
Mr Mansell said in a WAN joint statement with Seven today that the appointment of Mr Stokes and Mr Gammell balanced the broadcaster's request for board representation "with the incumbent board's desire to maintain a strong culture of board independence".
"The incumbent WAN board believes the concerns it raised in the lead-up to WAN's last general meeting have been addressed, given the changes in board size, composition and the agreement that all WAN directors will sign and abide by a conflict of interest protocol," the two media companies said.
Mr Mansell said the enlarged board reflected Seven's ownership level.
Mr Stokes said Seven was pleased the WAN board had accommodated its request.
"Peter (Gammell) and I look forward to making a contribution to WAN and to working for the benefit of all shareholders," Mr Stokes said.
