Myer bosses have been faced with angry investors not confident in the retail giant’s board and still expecting a takeover bid by hostile shareholder Solomon Lew.
Myer’s major shareholder Solomon Lew appears to have rallied investors against the department store chain’s board, securing a bruising “second strike” against their remuneration report and prompting a spill vote.
At the retail giant’s annual general meeting on Thursday, more than 25 per cent of proxy votes were against the report, which details generous packages for executives, for the second straight year.
But when a conditional spill resolution ensued, less than 38 per cent were in favour – below the required 50 per cent threshold – so a special meeting within 90 days to re-elect a new board will not proceed.
Chair JoAnne Stephenson had warned a spill would be destabilising during the critical Black Friday sales and Christmas trading period, saying the board and management team had worked “cohesively”.
Mr Lew, whose retail group Premier Investments has amassed a stake in Myer of more than 15 per cent, has long been agitating against the board, unhappy with its performance.
That dissatisfaction appears to persist despite Myer recently posting a full-year net profit of $51.7m, a sizeable turnaround from a $13.4m net loss previously.
Ms Stephenson was grilled on how the board was working with Mr Lew and whether board representation would be offered to Premier.
“We have endeavoured to have constructive dialogue with our largest shareholder and this has included board representation,” she responded.
“Unfortunately, to date we have been unable to reach agreement. The Myer board remains open to constructive dialogue.”
Ms Stephenson pointed out Premier had failed to offer any nominees in time for the meeting, saying the board was focused on maintaining majority independence and proportionate representation.
Premier said in August it had no “current” plan to launch a takeover offer, noting the retailer had appointed “defence” advisers.
But shareholders are clearly not convinced, with one lobbing a two-pronged question about Premier’s “apparent” intention to make a play for Myer and the board’s defence strategies.
Ms Stephenson reiterated the board remained “open to dialogue” and referred to Premier’s August statement denying a takeover plan.
“However, if that were to eventuate, the Myer board would be focused on ensuring appropriate value is realised,” she added.
A further question was why Myer continued to take an “adversarial” approach to Mr Lew’s group.
“I do believe that we have largely answered this question,” Ms Stephenson responded, reiterating there had been “constructive dialogue” about board representation.
“Our position has been a constructive one but with the interest of all shareholders as a priority.”
Investors were also keen to know when dividends would resume after being absent for years – even before Covid – and they have also suffered an ailing share price.
“The board fully understands the importance of dividends to shareholders,” Ms Stephenson said.
“Despite our solid result in 2021 and our strengthened balance sheet position, with the ongoing uncertainty around the timing of restrictions, the board took the prudent decision to continue the pause of dividends.
“As our performance continues to strengthen, the recommencement of dividends is a priority.”
The final vote tallies will be released later on Thursday.
Originally published as Myer board avoids spill, investors still expecting hostile Solomon Lew takeover
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