Super fund adviser’s ‘bizarre’ bid to axe Harvey Norman CEO for activist
Investors are being urged to sack one of the country’s most high-profile businesswomen from Harvey Norman’s board.
A corporate adviser to super fund giants is urging investors to sack one of the country’s most high-profile businesswomen from the board of retailer Harvey Norman and replace her with a shareholder activist who has run for board positions on major Australian companies 49 times and failed every time.
In a calculated move expected to draw a strong rebuke from corporate Australia, proxy firm Ownership Matters has advised its clients to vote against the re-election of highly regarded Harvey Norman chief executive Katie Page at the company’s annual general meeting on November 27.
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A copy of the report obtained by The Australian reveals Ownership Matters has recommended that Stephen Mayne be elected to the board of the retailer, even though the 50-year-old has no corporate experience in retail or property, no corporate board experience and no corporate management experience.
Harvey Norman has a market capitalisation of $5.2bn, and shares in the retailer have gained more than 32 per cent over the past year, outperforming the 16.4 per cent gain in the benchmark S&P/ASX 200 over the same period.
The advice sent out on Monday has baffled Ms Page’s husband, the business’s billionaire co-founder Gerry Harvey, who remains its largest shareholder, retaining direct ownership of almost a third of the company.
“I have been on a public company board as chairman since 1972, and I have never seen anything as bizarre as the fact that the best retail executive in Australia is to be replaced by a ratbag called Stephen Mayne who has been a proven failure … every time he’s run for a board seat,” Mr Harvey told The Australian.
He questioned the credibility of Ownership Matters and the sanity of anyone who heeded the recommendations.
“If a board member of an industry fund takes notice of that sort of recommendation from a proxy adviser, then you would have to question their sanity because it would be beyond belief that they would take notice of that,” Mr Harvey said.
“It is beyond belief that the proxy advisers says that.
“But if they (clients of Ownership Matters) take this advice, they should forfeit their right to sit on any superannuation board or any board in this country.”
Ownership Matters holds a growing amount of sway among superannuation funds and boasts a strong working relationship with the Australian Council of Superannuation Investors.
Ms Page, who as Harvey Norman’s chief executive for the past two decades has been credited with overseeing its successful expansion domestically and overseas, said she was equally stunned by the recommendations.
“Let me get this straight? OM want to replace a woman with tonnes of retail experience, loads of management skills and board experience with a bloke who has none of that, and who is running on an agenda of greater board diversity? Go figure,” she said.
Mr Mayne was also stunned by the recommendations.
“Wow, that’s news to me,” he said on Thursday of the advice to elect him to the board.
“It’s pretty obvious I’m an independent director but, let’s face it, it’s all academic. It doesn’t matter what (Ownership Matters) say, it’s a controlled company so I won’t get elected.”
While he maintained he was a suitable candidate to bring an independent voice to the Harvey Norman board, Mr Mayne disagreed with any suggestion Ms Page be removed from the board.
“There’s not a problem with Katie,” he said. “I think it’s good she put herself up for election when she didn’t have to. Katie should be the only one on the board who is safe.”
Just had a call from a journo at The OZ saying that one of the big proxy advisers is recommending a vote for me at the upcoming Harvey Norman AGM. Told him it was news to me but a welcome development.
— Stephen Mayne (@MayneReport) November 14, 2019
Mr Mayne, the founder of the Crikey news website, has described himself as “Australia’s most unsuccessful candidate”, having put his name forward for election to a listed board 49 times — including at BHP Billiton, Commonwealth Bank, Telstra, Woolworths, David Jones, NRMA Insurance, OZ Minerals, Southern Cross Broadcasting, Macquarie Group, Santos, Ten Network Holdings, NAB, Fairfax Media and News Corp Australia, publisher of this newspaper — and failed each time.
“This is the 50th tilt,” he said. “There is a certain amount of pride in being able to say you’ve had $400bn worth of stock voted against you.”
A freelance journalist and former Melbourne City councillor, Mr Mayne holds 23 shares in Harvey Norman, valued at about $100, but said he would invest heavily if elected.
“I would buy more than $100,000 worth of shares the first week,” he said. “I absolutely believe in directors having skin in the game.
“Most directors don’t have any shares when they join a board so I have more shares than your average entering director.”
He signalled his intention to nominate himself for a Harvey Norman board seat next September along with an agenda of “board renewal, more age and gender diversity on the board, the recruitment of a new independent chair, full consolidation of the franchise network in the accounts and valuation disclosure of individual properties in the $3bn property portfolio”.
Ownership Matters, founded in 2011, has become increasingly influential: earlier this month Boral director Karen Moses suffered a sizeable protest vote against her re-election to the construction materials giant’s board after Ownership Matters raised concerns over her record as finance chief of Origin Energy.
OM director Dean Paatsch defended the recommendations laid out in its report. “Is (Mayne) qualified?’’ he said on Thursday.
“Well he’s not a drunk or a bankrupt. You only have to be of sound mind and not bankrupt to be qualified to be on a board.”
He said the advice to elect Mr Mayne to the board had been designed to send a specific message to Mr Harvey about the company’s corporate governance.
“Is Mr Mayne the (billionaire founder of Amazon) Jeff Bezos of Australia? No he isn’t.
“It is a reluctant recommendation made in the express knowledge that he stands a snowflake’s chance in hell of being elected.”
The Ownership Matters’ recommendation comes in direct contrast to influential governance advisory firm ISS Australia, which has advised its clients that Ms Page should be re-elected, given that “her experience and knowledge of the operations of the business were considered integral” to its ongoing success.
Widely regarded as one of the nation’s most successful businesswomen, Ms Page joined Harvey Norman as an assistant when it was just one store in 1983, and has been running the company, now boasting more than 200 stores in Australia, with her husband since 1987.
She has also been a key driver of an expansion into Europe and Asia. Harvey Norman recorded overseas sales of more than $2bn in 2018-19, or 23 per cent of total group profit before tax.
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