The Guardian August 23, 2000


Class reality of "people's capitalism"?

by Anna Pha

Optus employees and other small shareholders got a taste of "people's 
capitalism" at the profit-hungry telecommunication company's AGM in Sydney 
last Thursday, August 17.

Optus is the main foreign-owned "competitor" lured to Australia by by tax 
breaks and guaranteed unfettered access to Telstra's technology. Floated on 
the sharemarket two years ago, its principal shareholder (parent company) 
is now the British company Cable & Wireless, which holds 52 per cent of its 
shares  hence its new name, Cable & Wireless Optus.

The other top 20 shareholders are the usual institutional shareholders  
banks, insurance companies, superannuation funds and other investment 
houses.

Between them they hold more than 80 per cent of the 3.77 billion shares.

Then there are the thousands of "mums and dads" and Optus employees with 
their relatively small bundles of shares.

A number of them attended the AGM last week. Their voice was heard as they 
asked questions of the board, and voted overwhelmingly against a resolution 
to give Optus chief executive Chris Anderson 1.67 million free shares over 
the next three years  presently worth $5 each on the stockmarket.

But their votes counted for little  voting is based on one-share one-vote 
 no democracy here.

The resolution, which had been defeated on a show of hands, was then passed 
in a formal poll based on the number of shares held and including the 
British company's (majority in its own right) proxies.

Anderson's deputy, Norman Gillespie, was similarly granted 688,785 free 
shares.

The total value of these shares at current market prices is more than $10 
million  what the chair of the meeting called "rewarding performance" and 
"incentifying future performance".

The $10 million reward comes on top of their salaries, bonuses, 
superannuation, and other "rewards" which between the two of them totalled 
$3.8 million last year. Nice work if you can get it!

In answer to a question from Burt Blackburne, representing the staff of 
Optus, the chair Sir Ralph Robins (also chair of the parent company) 
emphasised that the company was trying to reward results.

He said they were "trying to reward people well if the company succeeds".

And the company has certainly succeeded if the annual report is to be 
believed. It has turned around from an operating loss of $581 million two 
years ago to an operating profit of $264.3 million in 1999-2000.

Optus paid NO income tax on the $264.3 million profit.

The income of the 50 or so top executives totalled $22.884 million last 
year. They will also be rewarded with generous bonuses and share offers.

An aggressive competitor in a rapidly growing market, last year Optus 
increased its sales revenue by 29 percent to $4,112 million last year.

The operating profit per employee has risen by more than 50 per cent in the 
last two years from $105,000 to $158,000  surely a performance worthy of 
reward.

In reporting on the surge in revenue, Anderson boasted that labour costs 
had fallen from 14 percent of revenue to nine percent of revenue in the 
last two years, a sterling performance by the Optus workforce.

The company's response to this increased productivity is to try squeeze 
even more blood out of its employees.

In fact, Anderson's and Gillespie's future bonuses are largely dependent on 
how much they can reduce the wages and conditions of the Optus workforce. 
There is no intention to pay just rewards to the workers who produced the 
massive productivity gains.

The Communications Division of CEPU has been trying to negotiate an 
enterprise agreement with Optus, as Mr Blackburne, the union's Victorian 
Assistant Secretary, told the shareholders' meeting.

The members want improvements in the current agreement but Optus has other 
ideas.

It rejects any general wage increase before July 2001 and refuses to 
include guaranteed rights to sick leave, preferring to leave it to the whim 
of individual managers.

Optus refuses to grant the 12 weeks maternity leave being sought, currently 
six weeks.

There are differences over rostered days off, on non-payment of higher 
duties allowances, and Optus' failure to consult employees on changes.

Optus also refuses to end its discrimination against employees hired after 
August 1999 in respect of superannuation options.

The chair refused to discuss the enterprise agreement negotiations.

The meeting was not surprised to learn in answer to a question that 
auditors KPMG received just over $1 million for their services last year.

But they were shocked following questions about the independence of the 
auditors when they were told that the same auditors had been paid more than 
$4 million for other services to Optus.

The chair denied a conflict of interest. 

Questions were also asked about Optus' cash-for-comment contract with 
Sydney radio commentator Alan Jones, who the company paid more than $2 
million for his on-air promotion of Optus.

Concerns were also raised about the non-payment of a dividend despite the 
huge profit. No guarantees were given about future dividends.

Anderson summed up Optus' capitalist goals: it would maintain its momentum 
"in pursuit of one clear and overriding goal  to deliver sustained and 
increasing shareholder value"  meaning bigger profits for the handful of 
majority shareholders and higher rates of exploitation of its workforce.

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