Solomon Lew defends CEO after Premier ‘first strike’

Premier’s Solomon Lew says an apparent AGM protest vote by proxy advisers over CEO Mark McInnes’ pay is unjustified.

Upbeat: Premier Investments CEO Mark McInnes and Chairman Solomon Lew. Picture: David Geraghty

Premier Investments chairman and biggest shareholder, billionaire retailer Solomon Lew, has defended the company’s performance and that of its chief executive after a “first strike” against its remuneration report at the AGM.

He pointed to the retailer’s sharemarket performance over the last decade as well as the leadership of its CEO, Mark McInnes, who navigated the company through tough conditions brought on by the COVID-19 pandemic.

In a statement after Premier Investments was slapped with a 48.51 per cent vote against its remuneration report, Mr Lew said it appeared the large “no” vote was driven by proxy advisers unhappy over Mr McInnes’ pay.

A second “strike” next year could open the way to a board spill.

The vote cast a shadow over the AGM, which had earlier heard Mr Lew was “very optimistic” about the retailer’s outlook after a 70 per cent jump in online sales.

Mr Lew, who owns 40.4 per cent of Premier Investments, strongly backed his CEO and his pay record, arguing Mr McInnes deserved his salary, especially for his management during the pandemic.

“It’s clear that we have suffered a first strike against our remuneration report, but it’s completely unclear to me how it can be justified in relation to the outstanding performance that our board, CEO and management team have delivered,” Mr Lew said.

“What is clear is that this strike has been driven by some proxy advisers. I would remind them that remuneration is meant to reward performance and align management and shareholder interests. The fiscal 2020 remuneration report details the bonus Mr McInnes received in 2020 due to the 2019 record underlying earnings being up 11.5 per cent.

“The quantum of this bonus was exactly the same as the prior year when Premier received a 96 per cent vote in favour of the remuneration report.”

Mr Lew added that where management teams deliver outstanding results, they should be rewarded for doing so.

“Our CEO, Mark McInnes, and his team under the direction of our experienced board have delivered record results every year for the past nine years, and this year Mark has steered us through the extraordinary challenges of COVID-19.

“(O)ver the past nine years (Premier Investments) has outperformed the ASX 200 by over 200 per cent. This demonstrates that Premier is consistently one of the best performing companies on the ASX.”

Mr Lew also said despite the fact that he received no remuneration from Premier, 40.4 per cent of shares owned by himself and his associated entities elected not to vote on the remuneration report resolution.

“Had these shares been voted, there would not have been a strike recorded.”

Solomon Lew at last year’s AGM. Picture: Aaron Francis

Record online sales

Earlier, Mr Lew said the company’s fashion brands posted record sales in the Black Friday and Cyber Monday retail events, as he declared himself “very optimistic” about the year ahead.

The retail billionaire also said Premier Investments was perfectly placed to benefit from the accelerated switch to online shopping, with a decade of investment in IT and digital platforms now proving its worth.

Like many retailers, Premier shut stores and thousands of workers home as the COVID-19 pandemic swept Australia.

But in a speech to the company’s AGM, Mr Lew said that for the first 18 weeks of the financial year, online sales rose 70 per cent above the same period in 2020, with Premier Retail records tumbling on the Black Friday and Cyber Monday weekend.

Premier Retail, part of Premier Investments, owns a stable of fashion outlets like Just Jeans, Dotti, Portmans, Peter Alexander, Jay Jays and stationery store Smiggle.

Mr Lew said one feature of Premier’s online performance was the “significantly higher” EBIT margins achieved than in physical stores.

Mr Lew said the retail business and concept should be “straightforward” and this was the company’s focus in the future.

“Having the product customers want, at the time they want it and at a price they are prepared to pay. Sounds simple, but it is exceptionally hard to execute and achieve at any time - let alone the year we have just faced.”

Mr Lew said he was upbeat about the year ahead. Premier’s heavy investment in technology was proving invaluable for online sales, while it was now back to full employment of its staff after sending thousands of workers home during lockdowns.

“Looking ahead, we are very optimistic. We have strong collections of wanted product for each of our brands, we have well managed inventory, and we have already seen a very positive customer response to this season’s products, with a willingness to spend, as evidenced by our recent record Black Friday and Cyber Monday trading results.”

Mr Lew said this, together with the reopening of borders in Australia and the recent reopening of its stores in England, gave the company reason to be hopeful for the all-important Christmas trading period.

“That said, this crucial season is not yet over, however we believe we are significantly better placed than our key competitors.”

Mr Lew said 2020 was a “year of two distinct halves” marked by Brexit uncertainty in Britain, protests in Hong Kong, the bushfires that ravaged parts of Australia and the weakening of the Australian dollar - all before even the world had to deal with the COVID-19 pandemic.

“During the second half, global trading was severely impacted by COVID-19, but the Premier Retail team proved to be resilient in the face of adversity. We continued our performance of delivering year on-year record financial results while maintaining the security of a strong balance sheet.

“To demonstrate, the financial impact of COVID-19 at its peak, retail store sales were down 78.4 per cent and global sales were down $131.1 million on the prior comparable period between 11 March 2020 to 15 May 2020.”

Mr Lew said the global health crisis has been a major catalyst for accelerating the ongoing changes in consumer retail preferences.

“Temporary store closures and ongoing government implementation of social distancing and “stay at home” measures have rapidly increased the trend toward customers shopping online.

“It is underscored by the 70 per cent growth experienced in the group’s online business during the second half of the year, contributing more than 25 per cent of Premier Retail’s total sales at a significantly higher EBIT margin that the retail store channel.

“Our performance and our online channel growth have not been an accident. Over the past nine years, Premier has made significant investment in a wholly owned and fully integrated distribution centre, supported by digital capability, and IT infrastructure.”