‘Surprising and inappropriate’: Myer’s failed ultimatum to Solomon Lew

Myer chairman JoAnne Stephenson has instead engaged in a troubling exercise in fence-sitting.

Loading

She is abstaining from making a recommendation on the election of McCartney and will not vote any proxies vested with the chairman.

Stephenson could have chosen to recommend against the appointment of McCartney given Premier gave little ground on Myer’s demands.

But she has a number of problems, not the least of which is a very weak negotiating position.

McCartney is a well-experienced retail operator. Sure, he might be Premier’s Trojan horse but as the largest shareholder, Lew’s Premier is entitled to have a representative on the Myer board.

This sits squarely within the bounds of shareholder democracy.

Stephenson’s other big problem is that Premier surely has enough voting power to get McCartney elected.

If Myer shareholder voting turnout continues to previous form, only 50 per cent of the shareholders bother to vote. The mathematics around this are simple enough – the half that do vote get double the voting clout.

Under this scenario, Premier’s effective vote increases from 23 per cent to 46 per cent. The vote requires only 50 per cent support, and you have to assume that McCartney will gain support from other shareholders.

Myer  chairman JoAnne Stephenson has engaged in a troubling exercise in fence-sitting.

So, it’s a fair bet that after six years of fighting with Myer, Lew will get one candidate around the Myer boardroom table.

Stephenson would understand this and know that it would undermine her credibility and authority if she recommended shareholders vote against Premier’s candidate and he still won the seat.

What happens to the remainder of Myer directors will greatly depend on what Lew decides to do.

He has a tradition every year of voting against all incumbent Myer directors at each annual meeting. The only target he has managed to hit in that time was former chairman Garry Hounsell.

But despite having beefed up his shareholding this year and a better chance of winning any vote, Lew has been strangely silent on his intentions for the Myer meeting.

Stephenson and non-executive director Jacquie Naylor are both up for election. While Lew could make their place on the Myer board difficult to retain, he has yet to herald his intentions.

And if he was of a mind to make trouble, he would probably have begun his campaign already.

The best card that Myer has to play is its recent financial performance. Under chief executive John King, the arduous turnaround strategy is gaining some traction and the share price is now reflecting the improvement.

Sure it doesn’t come close to matching the success in trading and profit Premier boasts, but it has been welcomed by Myer’s other shareholders.