Myer failure culturally entrenched, says Lew
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.