By Dominic Powell
Major Myer shareholder Geoff Wilson says the struggling retailer can further slim down its board, despite moves by chairman Garry Hounsell to remove two of its directors and slash board fees.
The company announced on Wednesday that non-executive directors Lyndsey Cattermole and Julie Ann Morrison would retire by the end of the year following pressure from Mr Wilson, the company’s second-largest shareholder.
Myer will not look to replace the directors, reducing its board to five members including chief executive John King and Mr Hounsell. Director fees will also be reduced, with Mr Hounsell’s annual base fee lowered to $250,000 and the other non-executive directors’ fees dropping to $100,000.
Mr Wilson, who chairs investment firm Wilson Asset Management, sent a letter to Mr Hounsell on Tuesday requesting changes at the board level in order to have Myer’s management more accurately reflect its $190 million market capitalisation.
However, on Wednesday the veteran stockpicker told The Age and The Sydney Morning Herald he planned to go back to Myer’s management to get further clarity on the quantum of fee reductions comparative to other companies of a similar capitalisation.
He also noted there was room in the company’s constitution for the board to potentially cut another director. “Their constitution means they have to have [a minimum of] four directors,” he said. “So they could probably lose one more.”
Mr Hounsell said the company had been considering the size of its board for “some time” and that Myer was “extremely mindful” of reducing the board’s size and fees to reflect the size of the business.
“Today’s announcement of a smaller board reflects the size of the business, our ongoing focus on costs and the current operating environment,” Mr Hounsell said.
Despite Myer’s quick moves to quell Mr Wilson’s concerns, the investor was still reluctant to say he was supportive of the company’s management and said he was waiting for another call from fellow major shareholder Solomon Lew.
Mr Hounsell also responded to a number of other queries raised by Mr Wilson in his missive on Tuesday, including Myer’s relationships with suppliers.
Mr Lew, who’s Myer’s largest shareholder and a fierce opponent of its management, alleged in a letter earlier this month that suppliers were “hesitant to do business” with the company, a claim Mr Wilson asked the board to explain.
Mr Hounsell said the company would not comment specifically on its relationship with suppliers, but said the business had retained the support of its merchandise supplier base and had continued to pay suppliers in line with their existing contract terms or better.
However, the chairman noted the retailer had been frequently adjusting its product range during COVID-19, changes which may have resulted in suppliers being cut.
No key suppliers had been lost due to an inability to receive trade credit insurance, Mr Hounsell said.
The chairman promised shareholders Myer would return to paying dividends and distributing its stash of franking credits “when it is prudent to do so”.
“Finally, Myer takes this opportunity to thank Wilson Asset Management for its ongoing support of the company during what is, and we agree with the comment in your letter; ‘a difficult and uncertain time’,” Mr Hounsell said.
Tensions between Myer’s management and its largest shareholders have been building in recent weeks following the company’s $172 million loss reported in early September.