Myer released its annual report on Thursday morning, revealing changes to board fees and executive salaries to cutback expenses, while re-affirming the company’s customer first and e-commerce focus for FY19.
After receiving a ‘first strike’ under the Corporations Act last year when roughly 29.4 percent of voted shares were against the company’s remuneration report, Myer is taking drastic last-minute steps to save face before this year’s annual meeting.
Under the business’s new plan, a number of the company’s head honchos will take a pay cut and directors will be forced to buy more shares.
In particular, the chairman’s fee will be reduced a further $50,000, bringing it down to an annual remuneration of $300,000 in 2019, compared to $350,000 in 2018 and $400,000 in 2017.
Non-executive director fees will also take a hit, being reduced from $150,000 per year to $120,000. Non-executive directors will also reportedly have to fork out at least one year’s worth of fees on shares within the next three years, in a bid to better align the interests of the directors and shareholders with the business.
CEO and Managing Director, John King, will be impacted by these wage revisions, as he will not receive any payments under the existing short-term incentive plan unless Myer manages to achieve net profit growth. He will also be required to hold shares equivalent to 75 percent of his fixed remuneration while he is employed by the department store.
The CEO seems unfazed by these changes, claiming, “Myer’s best days are ahead”, as he looks towards a year of “delivery, not promises”.
Myer’s FY19 Focus
In the report, the embattled department store’s Chairman, Garry Hounsell, provided largely positive commentary, despite expressing “disappointment” in the company’s poor performance during FY2018.
According to Hounsell, the board has made “significant leadership changes”, including the appointment of King as the retailer’s chief executive officer and managing director, as well as recruiting a new chief financial officer and chief merchandising officer. Moving forward, the retail veteran says the company will continue to focus on King’s customer-first strategy and growing its online revenue.
“[King] is committed to ensuring Myer is Australia’s favourite department store by providing friendly, helpful service, high quality and exclusive brands, and offering compelling value,” Hounsell said.
Myer hopes to achieve this by transforming its in-store customer experience, adding new brands and categories that can only be found at Myer and funnelling extra resources into the business’s online channels.
“Myer’s online business is a significant asset that continues to deliver strong growth and now represents our third largest store,” he said.
Over the past 12-months, Myer launched The Myer Market, which focuses heavily on home and entertainment categories as its answer to the explosion of online marketplaces in Australia, while also launching a new website for its flagship Myer brand.
To-date, Myer’s strategy has largely revolved around its belief that Myer is a well-loved business by Australian consumers, which the company stated explicitly when it re-launched its My Store campaign earlier in the month.
However, as Premier Investments continues to call for a Board spill and the bricks-and-mortar arm of its business struggles to overcome the challenges faced by department stores not just in Australia, but also across the globe, Myer definitely has a big, tough year ahead of it.
Lew has already made threats to cause trouble at this year’s shareholder meeting, using clauses from the Corporations Act to demand an updated copy of Myer’s register of shareholders prior to the AGM. According to a statement released by Premier Investments at the start of the month, “Premier has requested these registers in order to consider writing to Myer’s members in relation to any resolutions proposed at Myer’s AGM.”
After reporting a 3.2 percent loss in sales in mid-September, Lew, whose business holds a 10.8 percent stake in Myer, called the business a “disgrace”.
“The board of Myer is an absolute disgrace,” he said in a release, “And while the board of Myer, led by Garry Hounsell, has bumbled along and taken their fee cheques, it is Myer’s shareholders who have suffered.”
With a reported $486 million loss over the last year, and further difficulties predicted for the coming years as the company continues to suffer from slow sales, restructuring and store exit costs and asset impairments, Lew believes Myer’s goodwill with its partners is at risk, with losses set to rise as a result of reported increases in interest costs.
The struggling retailer will meet for its Annual General Meeting at Mural Hall, inside its Melbourne CBD store on Friday, November 30.
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