Solomon Lew lands a blow as Myer hit with ‘first strike’ at AGM as directors scrape through

Myer shareholders have heeded Lew’s call to vote against Myer’s remuneration report but all three directors have scraped through.

Myer chairman Paul McClintock arrives at the department store’s AGM at its Bourke Street store in Melbourne. (Stuart McEvoy/The Australian)

Solomon Lew, Myer’s biggest shareholder and for the last few months its savage critic, has won round one in his bid to reject all resolutions at the retailer’s annual general meeting after it was revealed to shareholders that 29.33 per cent had voted against the first resolution to adopt the remuneration report.

A 25 per cent vote against the remuneration report has earned Myer a “first strike”, with a “second strike” next year at the AGM triggering a full spill of the board.

But Mr Lew has failed in his bid to vote down re-election of three Myer directors. Votes against the election of JoAnne Stephenson came in at 29.99 per cent; against Garry Hounsell 29.34 per cent and against Julie Ann Morrison at 28.73 per cent

There were also strong votes against granting of performance rights to Richard Umbers — with 30.15 per cent of shareholders opposing the move.

There was also a 28.03 per cent vote against amending the constitution in relation to the holding of hybrid AGMs and 27.8 per cent voted against the renewal of takeover provisions in the constitution

Given these last two were “special resolutions” and required 75 per cent shareholder approval to get through, they have failed to pass and thus Mr Lew has won these two battles in addition to the “first strike” against the remuneration report.

Mr Lew’s fashion conglomerate Premier Investments has a 10.8 per cent stake in Myer and has been rallying other shareholders to vote against all resolutions including the election of three directors.

In the lead up to the AGM this morning the nation’s three leading proxy advisory services had advised their own clients — which typically includes superannuation funds and institutional investors — to vote in favour of all resolutions at the Myer AGM.

Earlier in the day, outgoing Myer chairman Paul McClintock has made an impassioned plea to shareholders to rally around the board and its management in the face of aggressive tactics from Mr Lew’s fashion conglomerate Premier Investments.

Mr McClintock also warned Premier Investments (PMV), who had representatives in the audience this morning, that Mr Lew’s behaviour over the last few months, led by his relentless and personal attacks on the board, had made Premier into an “aggressor’’ that was alienating it from one of its most important customers, Myer (MYR).

“I believe that the roles of aggressor and partner are inconsistent, and that Premier shareholders will come to view that this campaign has alienated one of their important business partners,’’ Mr McClintock said this morning.

He also warned Premier Investments wanted to gain control of Myer, without paying a takeover premium, and would use its control to sell more Premier-owned fashion and take advantage of Myer’s attractive rentals.

Solomon Lew did not appear at the AGM in person, although his media advisers and proxies for Premier Investments — believed to be from law firm Arnold Bloch Leibler — were in attendance.

Mr McClintock made a direct and rousing speech aimed squarely at shareholders at Myer’s Mural Hall in the flagship store in Melbourne, asking for their support.

He asked them to ignore “the noise” of the last few months, driven by Mr Lew and his withering attacks on the board, and asked them to rally to the board’s side as they transformed Myer with their ‘New Myer’ strategy.

“So whatever the noise we have all endured over the past few months, the quality of the team’s work is clear and on display,’’ he said referring to the Myer store as it is awash in Christmas displays.

“Whilst I fully acknowledge the current share price, I ask you to also look at other indications of progress that will be outlined in detail during Richards update later.

“Today is your opportunity to give Myer’s refreshed board, and its new chairman a clear and unequivocal mandate for the future.

“Today is your opportunity to send a strong message that you want the board and management to get on with the job of delivering New Myer.

“Today is your opportunity to send a message that you want a cohesive and united board and management team that works together, in the best interests of our company.’’

Mr McClintock said Premier Investments had ulterior motives in its attacks on Myer, namely seizing control of the retailer without paying a takeover premium — of which he as chairman needed to protect all shareholders.

“It should not surprise you that I take a far, far more sceptical view,’’ he said referring to Mr Lew’s tactics.

“That is my job as chairman to protect the interests of all shareholders. I believe it was not a strategy for Myer, it was a strategy for Premier to run Myer for the benefit of Premier.

‘’This would be achieved by installing their three nominees onto Myer’s board, selling more of their products in Myers stores and capturing the benefits of our attractive rentals in major shopping centres for the benefit of their own brands.

“If Premier investments wants to secure those benefits for their shareholders then they must pay you a premium for that benefit.’’

Mr McClintock told of a recent meeting with former Prime Minister Paul Keating, and his wisdom on leadership.

‘’We have imagined how to make Myer relevant to a new generation, it is exceptionally difficult to get there but we have a plan, and Premier in our view, is seeking to derail it.’’

Mr McClintock said he was concerned about the tactics employed by Premier that threaten successful transformation of Myer

Later, turning to sales Mr McClintock said trading has remained difficult.

But there was also an olive branch from the outgoing Myer chairman, as he added that he hoped once the votes were counted on the resolutions and a winner was announced, that Premier Investments and Mr Lew would heed the result — as would the Myer board.

“I hope this meeting will mark the start of a return to our long standing previous relationship.

“All parties should listen to the wishes of our shareholders.’’