ISS confirmed on Friday it would advise shareholders to back Mr Mayne’s board tilt arguing it “would represent an increase to both the independence level of the board and an increase to the non-executive directors’ component”.
Ownership Matters also supported Mr Mayne’s election and advised a vote against the company’s chief executive Katie Page, who is also up for re-election.
“There’s obviously now a big problem that’s accelerating every year between super funds and certain proxy advisors where they’re not bothering to do the work so they look at what the advisor says and vote accordingly,” Mr Harvey said. “So these proxy advisors are getting more and more powerful as every day goes by.”
Ownership Matters and the third major proxy firm, CGI Glass Lewis, both recommended shareholders vote against the company’s remuneration report, which sets out the pay of top executives. ISS did not recommend a vote against the remuneration report.
Harvey Norman suffered a ‘first strike’ last year when 50.6 per cent of voting shareholders opposed its remuneration report at the AGM. A second strike this year would result in another vote to spill the company’s board.
Mr Mayne, a former Melbourne city councillor and business journalist, self-nominated for a director seat last month, promising to push for more independence and diversity on the Harvey Norman board along with greater transparency on the company’s franchisee network and property portfolio.
He said was not surprised Ownership Matters supported his tilt, saying proxy firms had grown tired of Harvey Norman being a repeated “governance shocker”.
“And it’s a safe protest because everyone knows, statistically, I can’t get elected,” he said.
Mr Harvey and associated entities control more than half of Harvey Norman’s shares.
The retailer has been targeted by short-sellers, in part due to concerns about a lack of independent directors on its board and the way it values its property portfolio. According to Bloomberg, 7.89 per cent of the company’s outstanding shares have been sold short.
Ownership Matters director Dean Paatsch told The Age and The Herald his firm would support Mr Mayne’s tilt at the board because the proud owner of 23 Harvey Norman shares was “the only alternative”.
“He’s what we would delightfully refer to as an ‘any port in a storm’ candidate,” Mr Paatsch said.
“Opportunistically he’s standing on a platform that we have advocated for to improve the transparency and governance of Harvey Norman, and it’s a useful way of highlighting those issues.”
Harvey Norman shareholder and Wilson Asset Management founder Geoff Wilson said while he supported Mr Mayne as a journalist and activist, he had less confidence about his suitability for a board seat.
“As Stephen’s tilt at the board is not endorsed by directors, it might end up being very disruptive and cost shareholders money,” he said.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.