By Rebecca Le May
Myer has slimmed down its board and trimmed wages for those who remain after a veteran fund manager called for major changes to reflect the ailing department store chain’s tanking market value.
In a letter to Myer chairman Garry Hounsell on Tuesday, Wilson Asset Management chairman Geoff Wilson said it was appropriate to reduce the number of directors and their fees “in a necessary alignment with companies of a similar market capitalisation”.
Mr Wilson noted Myer’s non-executive directors had accepted a 16.7 per cent cut to their fees in response to the impact of the coronavirus pandemic, which caused it to close all of its 60 stores over April and May, resulting in a more than 15 per cent plunge in sales for 2019-20.
“Our belief is the reduction needs to be permanent,” Mr Wilson said.
Myer responded on Wednesday, announcing non-executive directors Lyndsey Cattermole and Julie Ann Morrison had decided to retire at the annual general meeting next month and did not intend to seek re-election.
The company said it would not seek to replace the positions, with a view to further reducing board costs.
“We have been considering the size of our board for some time,” Mr Hounsell said.
The departures reduce the board from seven to five directors, including the chief executive and managing director John King.
Mr Hounsell said reduced fees for board members would remain in place for at least two years.
“The decision to forego director fees for a period in April and to receive reduced fees during May and June were absolutely appropriate and today’s announcement of a smaller board reflects the size of the business, our ongoing focus on costs and the current operating environment,” he said.
After Myer posted a full-year statutory loss of $172.4 million earlier this month – a massive turnaround from the net profit of $24.5 million for 2018-19 and the second biggest loss in its history – major shareholder Premier Investments labelled the results “dire”.
Premier chairman Solomon Lew was a director of Myer from 1985 to 2002, including being its executive chairman in 1995, and his company was scathing of Mr King, calling for the immediate resignation of the entire board.
“Today’s results are disastrous and shameful,” Premier said in a statement.
“Two years into John King’s tenure – it’s clear the Myer turnaround is in tatters. It’s now time for the CEO to follow the board through the exit.”
Premier described itself “as a long suffering investor and supplier”.
“It must be close to the end for suppliers who can no longer obtain credit insurance cover,” it said.
While shareholders had been suffering, Mr King pocketed $1.59 million, Premier said.
“Yet again Myer shareholders have been taken for a ride.”
Myer shares were up more than 2 per cent in morning to trade to 23.5 cents.
The company’s shares were 62 cents exactly one year ago and plunged to an all-time low of 10 cents in March.
When Myer made its ASX debut in November 2009, its shares opened at $3.88, a 5.4 per cent discount to the issue price.