Myer shrinks board numbers, cuts director fees after Geoff Wilson letter

The retailer will reduce its boardroom numbers and slash director fees, following a letter from Geoff Wilson urging action.

It is the third time Myer board members have slashed their fees since 2018. Picture: Greg Adams.

Myer’s shares jumped 3 per cent after the embattled retailer bowed to shareholder pressure to reduce its board numbers and slash director fees.

Myer on Wednesday said it would not replace directors Lyndsey Cattermole AM and Julie Ann Morrison when they retire from the board at its upcoming annual general meeting.

The decision comes after major shareholder Geoff Wilson on Tuesday called on the department store to take such action.

“We have been considering the size of our board for some time. Following the decisions of both Lyndsey and Julie Ann to retire at the upcoming annual general meeting, the board will be reduced to five directors, including the CEO and managing director,” chairman Garry Hounsell told shareholders.

Myer shares were up 3 per cent at 24c each in late morning trade, following the announcement. They closed steady at 23c.

Mr Hounsell will also reduce his annual base fee to $250,000, down from $300,000, while Myer’s remaining non-executive directors see their annual base fees shrink to $100,000, down from $120,000.

It is the third time the board members have slashed their fees since 2018. The new fees will remain in place for two years, Myer said.

“The decision to forego director fees for a period in April, and to receive reduced fees during May and June were absolutely appropriate and today’s announcement of a smaller board reflects the size of the business, our ongoing focus on costs and the current operating environment,” Mr Hounsell said.

Mr Wilson on Tuesday wrote to Mr Hounsell calling for the retailer’s board numbers to be reduced.

“We believe it is appropriate for the board to reduce the number of directors and their fees in a necessary alignment with companies of a similar market capitalisation,” Mr Wilson wrote.

In response, Mr Hounsell said it was something the board had been considering for some time.

“The Myer board is extremely mindful of minimising board and other costs, and the board size must reflect the size of the business, and the ongoing focus on costs, especially in the current environment – which today’s announcement reflects,” Mr Hounsell said.

Mr Wilson also called on Myer to come clean on its commercial agreements with suppliers after fellow shareholder Solomon Lew revealed that his private company, the Lew Group, had reduced its exposure to the department store chain and said other suppliers were hesitant to do business with it.

Citing confidentiality reasons, Mr Hounsell said he would not comment on Myer’s relationship with individual suppliers.

“What I can say is that Myer must constantly evolve its merchandise range to respond to customer demand. Most recently, during COVID-19, we’ve seen significant increases in customer demand for some categories and brands, and decreases in others, and Myer must adjust its range accordingly,” Mr Hounsell said.

“Myer has maintained the support of its merchandise supplier base and continued to pay its merchandise suppliers either according to existing contract terms, or better.”

Billionaire Mr Lew, who stands as Myer’s largest shareholder with an 11 per cent stake, took aim at Mr Wilson earlier this month for supporting the Myer board.

“These results are also to the great discredit of Geoff Wilson. The arrogance displayed by Mr Wilson in backing a failed accountant as chairman of Myer over the wealth of retail experience in Premier is breathtaking,” Mr Lew said after Myer posted a full-year loss of $172.5m for the 2020 fiscal year, the second-biggest loss in the company’s history.

“Mr Wilson should now acknowledge that the continued failure of Myer is at least partially his own fault and his investors should hold him to account for the losses they have sustained and will continue to endure unless there is immediate change.”

Mr Wilson’s final demand in his letter to the retailer was for it to distribute franking credits to shareholders when it begins paying dividends again.

“The board confirms its intention to return to dividend payments, and to distribute the associated franking credits, when it is prudent to do so, taking into account the company’s financial and trading position, as well as requirements under the company’s financing arrangements,” Mr Hounsell said in response.

Myer hasn’t paid a dividend since 2017, while its shares have tumbled more than 60 per cent in the past year.