The ASA is advising shareholders to vote against Harvey Norman’s remuneration report, along with the re-election of three of the company’s directors: David Ackery, Maurice Craven and Kenneth Gunderson-Briggs.
Ms Murray-Jones told The Age and The Sydney Morning Herald the ASA had a current focus on director skills and questioned the three directors’ level of independence and suitability for the board.
We feel that the board hasn’t been listening to minority shareholder concerns for a number of years.
ASA representative Pamela Murray-Jones
“The notice of meeting gives very brief profiles of the directors up for election,” she said.
“It doesn’t give us enough comfort that they are truly independent directors and have the skill sets that Harvey Norman itself has specified directors should have.”
The ASA had asked for a meeting with the board to inquire further about the directors, but their request was not granted.
Board spill likely to face vote
Both the ASA and Ownership Matters are recommending shareholders vote in favour of a board spill if Harvey Norman receives a vote of 25 per cent or more – a “strike” – against its remuneration report.
“We wouldn’t normally do that, it’s not our policy, but we feel that the board hasn’t been listening to minority shareholder concerns for a number of years,” Ms Murray-Jones said.
“Basically 50 per cent of shares are controlled by that board, and we’re worried retail investors are being left out.”
Stephen Walmsley, KPMG partner in leadership, performance and reward, said it was “very uncommon” for companies to face a spill resolution, noting most businesses seek to address shareholder concerns in order to prevent second strikes.
The prominent adviser expects this month’s AGM to be as eventful as Myer’s last year but said if a spill vote did occur, it would be highly unlikely that many shareholders would vote in favour.
“Most investors are not willing to throw a company into turmoil, as a board spill would be highly destabilising for the business,” he said.
Mr Walmsley criticised advisers recommending in favour of the board spill, saying while it was important to draw attention to governance issues at the retailer, advocating for something as disruptive as a spill was “irresponsible”.
“I know [Ownership Matters] said it has no chance of getting up but no matter what you think of the governance factors, you don’t want a board bunfight,” he said.
“It’s provocative, it makes shareholders sit up and take notice, but I wonder if they would be so quick to do so if there was a chance the board could actually spill.”
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.