SYDNEY (Reuters) - Shareholders of struggling Australian retailer Myer Holdings Ltd (MYR.AX) voted down its executive pay proposals on Friday, in a revolt led by billionaire investor Solomon Lew that put the board on notice to start delivering on its turnaround strategy.
The move marks an escalation of a battle between the 117-year-old department store chain and its biggest shareholder, who has been scathing in his criticism of the board’s response to new online competitors and stagnant retail sales growth.
While he failed to convince shareholders to give him three seats on the board, Lew’s insurrection against the executive remuneration report opens the way for a board spill next year. Under Australian law, companies must give shareholders the option to replace the board if the pay proposals are rejected two years running.
“We have sent the Myer board a very strong message: their time is up and change is on its way,” Lew, whose company holds 10.8 percent of Myer, told reporters after the meeting.
“I never heard one apology to shareholders of the massive destruction of their investments. In all my time, I have never seen a worse situation.”
To be sure, Lew is still a long way from winning over the majority of Myer’s shareholders. That said, he only needs 25 percent of the vote to defeat the remuneration report again in 2018, of which he already commands almost half.
Chairman Paul McClintock told the AGM he was “not fazed in the slightest” by Lew’s campaign. Myer said in a statement it would “continue to liaise with all stakeholders” about executive pay.
Once a dominant force in Australian retailing, Myer’s business model has buckled under pressure from new foreign “fast fashion” rivals, lackluster consumer spending and flat wage growth.
Myer’s shares have never traded over their 2009 issue price, and have fallen 40 percent since April when Amazon.com Inc (AMZN.O) announced plans to enter Australia, sparking speculation the Melbourne-based company could be a takeover target.
Enter Solomon Lew, whose Premier Investments Ltd (PMV.AX) - nearly four times Myer’s A$587 million ($447 million) market capitalization - bought into the company in March.
Lew has said he has no current plans to launch a hostile takeover of Myer, and dodged questions about his intentions on Friday.
The Myer annual meeting came a day after Amazon began an order-taking trial in Australia, and at the start of the country’s most important trading period, the month before Christmas.
But investors’ hopes for a bumper festive season were dashed when Myer, which is part way through a turnaround based on closing stores and ramping up online sales, told the meeting that tough trading conditions were continuing, after a sales decline for the quarter to Oct. 28.
“If I was Myer director, I’d be saying there’s a fair part of our shareholder base who are not impressed with how we’re performing,” Governance Institute of Australia CEO Steven Burrell told Reuters.
“That message would have got through.”
(This story fixes spelling of fazed in seventh paragraph.)
Additional reporting by Shashwat Pradhan and Aditya Soni in Bengaluru; Editing by Stephen Coates