Harvey Norman founder Gerry Harvey last week told The Age and Herald that regulators should investigate proxy advisers, after prominent firms Ownership Matters and ISS backed corporate agitator Stephen Mayne’s bid for a seat on the retailer’s board.
He also criticised super funds for “not bothering to do the work” and instead just following the recommendation of their advisers.”They have an agenda, and the super funds are falling into the trap unbelievably easily,” he said.
Mr Harvey’s comments echo those made last week by Ramsay Health chairman Michael Siddle, who said proxy advisers had gone “too far” and had lost sight of real issues on remuneration after the company received a ‘first strike’ against its remuneration report outlining executive pay.
Wesfarmers chairman Michael Chaney also slammed the “frustrating” issue and blamed international shareholders following proxy advice for the company’s 21 per cent vote against its remuneration report.
“When there are things that may be controversial, we’ll take the views from the proxy adviser on board, but then we will also do our own work internally to see if we should be voting that way,” Mr Zenonos said.
Mayne slams “culture war”
The support for Mr Mayne to join the Harvey Norman board has triggered outrage in sections of the media landscape, amid claims it runs contrary to proxy firms’ push for more board diversity. “This has been turned into a culture war distraction which just draws attention away from the ongoing governance breaches and mistreatment of retail shareholders in capital raisings,” Mr Mayne said on Sunday.
I don’t think it’s fair to make a blanket statement that everyone’s just doing what the proxy advisors tell them.
Russell Investment portfolio manager Andrew Zenonos
The Harvey Norman executive team is set to meet larger shareholders over the next week in an attempt to clear up any misunderstandings before the company’s annual meeting, which is shaping up to be one of the most eventful of the season.
The company could be hit with a ‘second strike’ – a vote of 25 per cent or more against its remuneration report – which would result in shareholders voting on a subsequent resolution to spill the entire board.
Both Ownership Matters and the Australian Shareholders Association are advising shareholders to vote for the spill motion, an unusual move which Mr Mayne believes indicates investors are at their “wits’ end” with Harvey Norman management.
Mr Mayne put himself forward as an independent board candidate earlier this year, promising to push for more independent board members and also a re-evaluation of the company’s $2.9 billion property portfolio.
His tilt coincides with re-election bids from four of the company’s directors, including chief executive Katie Page. Mr Mayne hit out at media suggestions he was seeking to replace Ms Page on the board, saying it was a “complete distraction”.
“I’m not running against anyone, I’m running for the board,” he said.
Neither he, Ownership Matters or ISS had suggested the former Melbourne City councillor replace Ms Page on the board, with ISS advising shareholders vote for her re-election.
Ownership Matters advised a vote against Ms Page’s re-election, but on the grounds shareholders should vote against all non-independent or executive directors.
Dean Paatsch, director of Ownership Matters, said the firm’s recommendation against Ms Page was “not pejorative” and only intended to improve governance at the $5.3 billion retailer.
“It’s an opportunity to highlight those issues. It’s got nothing to do with gender or culture wars,” he said.
“The notion that we’re activists for the fringe left is frankly a critique by the lunatic, mouth-breathing right.”
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.