Myer risks board spill at annual meeting unless chairman steps down, Premier Investments says
12 September 2018. By Laurel Henning
Retail conglomerate Premier Investments said the chairman of Australian department store chain Myer Holdings, Garry Hounsell, must step down following the announcement today of the company's latest results. Billionaire investor Solomon Lew, who has agitated for board changes at Myer since October 2017, said Hounsell must now step down, or risk having his entire board spilled by a "shareholder revolt" at this year's annual meeting.
Myer published its results today for its financial year ending July 28. Sales for the year declined by 3.2 percent from A$3.2 billion ($2.3 billion) to A$3.1 billion, and gross profit declined 2.9 percent from $1.22 billion to $1.18 billion over the same period.
“Sales are down. Profits are down. Service levels are down. [Cost of doing business has increased]. Dividends have ceased,” said Solomon Lew, the chairman of retail conglomerate Premier Investments, and the investor agitating for change at Myer.
Premier bought up 10.77 percent in Myer, disclosing the stake in one fell swoop in March 2017.
Since last October, Lew has been pushing for board changes.
Lew lost his first fight for board changes at an annual general meeting in November, when Premier’s three nominees were rejected. But it did make headway at that meeting when shareholders held a first protest vote against executive pay proposals at the Melbourne-based company.
If Lew wins a second vote on compensation this year, it could trigger the board shakeup he desires.
“The board of Myer is an absolute disgrace,” Lew said today, following release of the company's results.
“Garry Hounsell today admitted that Myer shareholders deserve better. For once, Mr. Hounsell, we agree,” Lew said.
“Mr. Hounsell must step down immediately or risk having his board spilled by a strong shareholder revolt at the upcoming AGM,” he added.
“Premier will move forward to protect all shareholders, staff and stakeholders. We will not allow this failed board of directors — some of whom are currently in front of the Federal Court for failing to act in the best interests of shareholders — to run Myer into the ground.”
Myer is currently facing a class-action lawsuit over a loss in shareholder value because of a 2015 profit warning given when the department store missed out on forecasts given in September 2014.
“The banks are now firmly in control of Myer,” Lew said, after the company agreed on new financing deals with its lenders.
The new agreements will “further erode Myer’s goodwill with its partners. And interest costs are way up on the new loan facility, which will exacerbate the losses,” Lew said.
Myer has yet to announce a date for its 2018 annual meeting.
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