Myer shareholders deliver second strike, board remains
More than 61 per cent of Myer shareholders opted to approve the department store’s proposed remuneration report at the retailer’s annual general meeting in Melbourne on Friday, falling short of the 75 per cent threshold needed to avoid a ‘second strike’.
The count of proxy votes lodged did not include votes made in person at Myer’s historic Mural Hall, but the outcome is not expected to change.
The second strike triggered a subsequent vote on a board spill, which did not pass, despite the year-long campaign waged by the company’s biggest shareholder, Premier Investments, which had stepped up its criticism of the Myer board and, in particular, chairman Garry Hounsell in the weeks before the AGM.
The count of proxy votes lodged showed more than 63 per cent of shareholders were against removing the board.
Nevertheless, Hounsell fielded pointed questions from shareholders and their representatives at the meeting about Myer’s poor performance in recent years, its current financial position and the board’s ability to provide meaningful guidance to a retail business, given its lack of retail experience.
Two CEOs, two turnarounds
Hounsell defended the seeming illogic of the board’s backing of the ‘New Myer’ strategy laid out by former CEO Richard Umbers in 2016, and its support for a different turnaround strategy conceived by newly appointed CEO John King.
“First of all, there were green shoots showing this time last year. The online business was growing significantly, and clearance floors were working well,” Hounsell said, adding that he later had “questions” about the clearance stores when he was interim CEO.
King earlier in the day laid out his turnaround strategy for the department store. In addition to broader goals, such as understanding customers better, driving down costs and growing online sales, the company is pursuing profit by handing back space to landlords in 20 to 30 locations over the next five to six years, and grow certain categories, such as men’s and women’s shoes and accessories, while shrinking others.
King’s plan has undeniably injected a sense of cautious optimism in the retailer, but Hounsell warned it could not withstand continued attacks from Premier Investments’ chair Solomon Lew.
“The reality is, it’s not a campaign against the board, it’s a campaign against the company,” Hounsell said.
“On the one hand, Lew says he supports [John King], but he’s throwing massive bombs on the table and making King’s job harder to do.”
Hounsell described Lew’s comments about Myer going into administration as “fanciful”, but said staff, suppliers, landlords and bankers couldn’t help but be worried by his critical views of the company.
“It’s just a travesty,” he said.
Board: King doesn’t want 10 retailers telling him what to do
The Myer chair got into verbal spat with Jeremy Leibler, a partner at Arnold Bloch Leibler, which represents Premier Investments and proxies for more than 5000 Myer shareholders, over the wording of the ASX’s warning to Myer after the publication of its leaked first-quarter results in the AFR.
Myer earlier this year announced it would stop providing quarterly trading updates as it shifted focus away from top-line sales growth towards profitability, but after the results were leaked, it was forced to acknowledge a 4.8 per cent year-on-year drop in sales, leading its share price to plummet.
Hounsell and King defended the company’s decision to not provide quarterly updates, and Hounsell repeatedly stated that the board is aware of its continuous disclosure obligations, though he declined to say whether Myer will issue a profit downgrade in the coming months, as Leibler requested.
Hounsell also faced questions about his involvement in the termination of Richard Umbers in February of this year, which saw him step into the former CEO’s role for several months, and receive an annual salary in excess of $1 million, until John King was appointed.
Hounsell denied any impropriety and said he wasn’t sure how a chairman could not be involved in such a significant decision.
Asked about the level of retail experience on the Myer board, Hounsell said the aim was not to have 10 directors with retail experience telling King how to do his job on a day-to-day basis, but rather bring a breadth of knowledge to the table.
He highlighted Lynsey Cattermole’s background in IT as a key reason she was selected.
Cattermole and Dave Whittle were re-elected as board members, though the Cattermole received a narrow majority, with just over 56 per cent ‘yes’ votes.