Harvey Norman cans dividend, cuts board’s pay amid COVID-19 crisis

Gerry Harvey, along with the rest of his board, will take a 20 per cent pay cut to preserve cash in the face of the pandemic.

Chairman Gerry Harvey, along with the rest of the board, will take a 20 per cent pay cut. Picture: Britta Campion / The Australian.

Furniture, consumer electronics and bedding retailer Harvey Norman has decided to cancel its planned interim dividend, saving itself almost $150m, and will also cut the salaries of its top executives, including chairman Gerry Harvey and chief executive Katie Page, as the coronavirus pandemic threatens to push the retail sector into a recession.

“Given the uncertainty regarding the duration of the COVID-19 pandemic and its potential impact on trading, and for abundance of precaution, the board of Harvey Norman Holdings Limited has decided to revoke the decision to pay, and cancel the fiscal 2020 interim dividend of 12c per share, which was announced to the market on 28 February 2020,’’ Harvey Norman said in an ASX statement late on Thursday.

Harvey Norman said this will result in $149.5m of cash being retained in the business.

“In the present environment, the board believes that preserving cash is the most prudent course of action to protect shareholder value,’’ the company said.

Harvey Norman said all its Australian franchisee stores continue to trade, and all franchisee online services in Australia (click and collect and deliveries) are available.

To also preserve cash in the wake of the global economic downturn caused by the coronavirus pandemic, Harvey Norman said chairman Mr Harvey, chief executive Ms Page, chief financial officer Chris Mentis, and the executive directors David Ackery and John Slack-Smith will forego 20 per cent of their salaries for the next three months — April to June.

The non-executive directors have voluntarily elected to reduce their directors’ fees by 20 per cent for the next three months.

Last month Harvey Norman said its stores in Slovenia, Croatia and Malaysia would be closed by government decree, as global politicians scramble to deal with the coronavirus pandemic.

Mr Harvey earlier this week welcomed the federal government’s wage subsidy program, saying it would help his own aim of retaining every one of the retailer’s 14,000 employees. “The aim is not to lose anyone if we can, and I have told that to all the franchisees as well,” he said on Monday.

“With [the wage subsidy program], there is no reason a franchisee should lose anyone because even if they put them off a month ago, they can put them back on and they can get the money.”