Myer fail­ure cul­tur­ally en­trenched, says Lew

Herald Sun - - BUSINESSDAILY - JOHN DAGGE

RE­TAIL bil­lion­aire Solomon Lew says Myer’s chair is pre­sid­ing over an or­gan­i­sa­tion where “value destruc­tion” has be­come “cul­tur­ally en­trenched”.

The blis­ter­ing assess­ment forms part of a de­tailed at­tack on the per­for­mance of Myer is­sued as part of Mr Lew’s cam­paign to top­ple the board at its up­com­ing an­nual meet­ing.

Mr Lew’s re­tail ve­hi­cle, Premier In­vest­ments, is the big­gest share­holder in Myer.

His lat­est at­tack — which sav­ages Myer chair­man Garry Houn­sell — is made in an eight-page let­ter sent to each of the re­tailer’s 48,000 share­hold­ers.

The let­ter calls on them to vote against its re­mu­ner­a­tion re­port at this month’s an­nual meet­ing.

Premier also wants share­hold­ers to vote in favour of a res­o­lu­tion ap­point­ing it as a proxy to de­cide on a res­o­lu­tion grant­ing per­for­mance op­tions to new Myer chief ex­ec­u­tive John King.

“Since Garry Houn­sell joined the board, Myer’s share price has fallen 35 per cent and Myer has stopped declar­ing div­i­dends for the first time since its ASX list­ing,” Mr Lew writes.

The Mel­bourne-based bil­lion­aire said Myer’s board had dropped its long-term in­cen­tive earn­ings tar­get for man­age­ment in 2020-21 to a level that was 17 per cent be­low what earn­ings were in 2016-17.

“The value destruc­tion now seems so cul­tur­ally en­trenched that the FY21 (fi­nan­cial year 2021) earn­ings hur­dles for man­age­ment’s max­i­mum long-term in­cen­tives have been set be­low Myer’s dis­as­trous FY17 earn­ings,” Mr Lew writes.

“The only con­clu­sion that share­hold­ers can draw is that Garry Houn­sell be­lieves that, that dis­mal out­come is the best that can be achieved.”

Mr Lew, whose re­tail empire in­cludes Smiggle, Peter Alexan­der, Just Jeans and Port­mans, last year suc­cess­fully drew a first strike against Myer’s re­mu­ner­a­tion re­port.

If, at this year’s gen­eral meet­ing, 25 per cent of share­hold­ers again vote the re­port down, they will then vote on whether all board mem­bers should stand for re-elec­tion.

Such an out­come would open the door for Mr Lew to put for­ward a team of di­rec­tors he says are needed to save the depart­ment store.

Myer’s other large share­hold­ers, In­vestors Mu­tual and Wil­son As­set Man­age­ment, have pub­licly backed the board.

Mr Lew ap­pears to take a pot shot at the pair, say­ing in a state­ment sent out with the let­ter that “any cred­i­ble in­vestor can­not se­ri­ously back Houn­sell or his board in th­ese cir­cum­stances”.

Mr Lew said that, since the end of the 2017 fi­nan­cial year, shares in Myer had slumped by one third and it had stopped pay­ing div­i­dends.

In con­trast, shares at Premier are up 20 per cent and it paid a record 62c div­i­dend last fi­nan­cial year.

A Myer spokesman said the re­tailer was “fo­cused on our cus­tomers and the up­com­ing Christ­mas trad­ing pe­riod”.

Shares in Myer fell 1 per cent yes­ter­day to close at 48c.

Solomon Lew

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