Woolies’ Gordon Cairns calls on Roger Corbett

Woolworths has been warned that rehiring former CEO Roger Corbett as a consultant will be no “silver bullet”.

Former CEO Roger Corbett has been rehired by Woolworths as a consultant. Picture: Renee Nowytarger

Woolworths chairman Gordon Cairns has turned to the giant retailer’s most successful former chief executive, Roger Corbett, rehiring him as a consultant in a bid to arrest the company’s sliding performance and share price.

But fund managers cautioned that the appointment would be no “silver bullet” for the under-pressure retailer with the competitive landscape now much different since Mr Corbett was in charge almost a decade ago.

Ahead of what is expected to be a fiery annual meeting on Thursday, Mr Cairns continued with efforts to placate shareholders and stamp his authority on the company by putting Mr Corbett into the advisory role, a move strongly resisted by the previous board.

Mr Corbett, who stepped down as chairman of Fairfax Media this year, would advise the Woolworths board on issues relating to performance and business improvement opportunities, and mentor senior management, Woolworths said in a statement.

He is expected also to provide advice around the selection of a new chief executive, with a search still under way.

Mr Corbett was appointed executive director of Woolworths and managing director of its Big W chain in 1990. He was chief executive from January 1999 until September 2006. He was also a consultant to the company for five years when he left to pursue various board positions, including sitting on the board of US retail powerhouse Wal-Mart. “Roger Corbett is uniquely placed and eminently qualified to provide insight and advice to both the board and senior management at this particular time in Woolworths’ transformation,’’ Mr Cairns said yesterday.

“The board is delighted that Roger has made himself available and looks forward to working with him.”

Mr Corbett last night declined to be drawn on his plans for the retailer and said only the board and management of Woolworths should comment on the company.

“I haven’t got anything to say about it,” Mr Corbett said. “My advice will be to the board and the management.”

The appointment comes as Mr Cairns is pushing ahead with an overhaul of Woolworths after pressure from shareholders who have seen the share price fall nearly 20 per cent since last ­December. While nearly a third bigger than rival Coles, it has been beaten in sales growth for nearly six years and is losing hundreds of millions of dollars on an attempt to take on Bunnings in the hardware market through its Masters joint venture.

Analysts at Morgan Stanley said the appointment was “an incremental positive for Woolworths given his vast retailing experience’’, and noted the share price rose 266 per cent against a 66 per cent rise for the S&P/ASX 200 during his time as CEO.

Mr Corbett’s main contributions were likely to be helping in the search for a replacement to departing CEO Grant O’Brien, assessing existing capabilities and helping shift the company’s focus from shareholders to customers.

But Cyan Investments director Dean Fergie said times had changed since Mr Corbett’s tenure when Coles was poorly managed, German discounter Aldi was a minor player and the Masters business had not been launched.

“He did a lot in logistics and automation that helped improve performance, but now everyone else has caught up,’’ Mr Fergie said. “I don’t think bringing him back is going to be a magic bullet for the company.’’

Mr Cairns’s charm offensive with big fund managers seems to have paid off with many deciding to wave through the remuneration report at Thursday’s annual meeting rather than voting against it. Mr Cairns has told a number of investors that he would be introducing a “more enlightened’’ approach to executive pay at Woolworths.

John Pearce, the chief investment officer at the $50 billion UniSuper retirement fund, said his confidence in Mr Cairns’s abilities to grapple with the issues facing Woolworths had grown following a meeting with the new chairman.

“I think he had pretty clearly articulated his plans for turning this around and we think he has his arms around this business pretty quickly and that has given us a bit of confidence.’’ Mr Pearce said.

Mr Pearce also cautioned against Woolworths falling into a trap set by private equity to sell off Big W, despite the business suffering sliding earnings and a pessimistic outlook: “You have private equity that would love to pick up some of their (Woolworths) subsidiaries on the cheap, so there are some in the market ‘trash talking it’ … and I don’t think Gordon Cairns is going to fall for any of that.’’

Proxy adviser CGI Glass Lewis advised its clients earlier this month to vote against the remuneration report, citing the “inappropriate’’ deal with Mr O’Brien and former chairman Ralph Waters that will stretch out Mr O’Brien’s departure so he can grab millions of dollars in defined benefit scheme retirement payments.

Although Mr O’Brien’s planned departure was announced in June, using accrued annual leave and long service leave the company’s defined benefit scheme could deliver a $10 million windfall or defined payouts of as much as 70 per cent of his annual pay.

The size, nature and backroom dealings behind the scheme triggered much anger among investors as Mr O’Brien had overseen three profit downgrades, shrinking earnings and a collapsing share price.

The Australian Shareholders Association has changed its mind and said it would support the remuneration report.

Additional reporting: Ben Butler