Hours before the Myer Holdings Ltd (ASX: MYR) AGM yesterday, the chair, Garry Hounsell, retired from the ailing retailer. Mr Hounsell had been under intense pressure to resign by Solomon Lew, chair of Premier Investments Limited (ASX: PMV). The Myer share price increased 2.17% by the close of business yesterday. In addition, at the time of writing, it has already risen by 4.35% in early trading today.
The decline of the Myer share price
With 10.8% ownership of Myer, Premier has long been a critic, indicating it would vote against re-election of the chair. However, the deciding moment came when Wilson Asset Management, with 7.8% ownership, also indicated it would vote against the re-election. Nonetheless, the Premier chair has continued his criticism, saying in a statement.
Mr Hounsell's ousting signals to the entire board that their time is up.
In the interests of all shareholders, we expect the remaining Myer directors will now indicate their intention to step aside in an orderly manner or face an extraordinary general meeting at which they will be certainly dismissed.
For the sake of all of Myer's dedicated employees, its many hardworking suppliers, its loyal but frustrated customers, and of course its long-suffering shareholders, the company needs to be restored to health by installing a new, independent board.
In its annual report, the Myer board announced a statutory loss for FY20 of $172.4 million last month. This was the second largest loss in the storied company's history. Consequently, the Myer share price entered a period of volatility. Mr Lew has been calling for the resignation of the entire board since then. Wilson Asset Management chair, Mr Geoff Wilson, has stated that the company should revisit the number and remuneration of its directors.
Mr Hounsell's resignation comes after two other directors had already confirmed in September they would not seek re-election on pressure from Mr Wilson. The salaries of the board had also been reduced. However, Mr Wilson was seeking further discussions on remuneration for directors of a company with a market capitalisation of $190 million.
What happens next?
Mr Wilson has indicated that he doesn't support an extraordinary general meeting for a full spill of the board. Moreover, Mr Wilson has previously allied with other large shareholders to resist Mr Lew's 2018 attempt to roll the board.
Acting chair, JoAnne Stephenson, a former KPMG partner, called for unity during the AGM. The company is fast approaching its peak season during Christmas, and Mr Wilson in particular believes tipping the entire board out at this time would prove too disruptive. Ms Stephenson believes it is essential that the management team is able to focus on the period from Black Friday through to the January stocktake sale.
The Myer share price has been in inexorable decline for over a decade. Chief executive, John King, continues to negotiate with landlords to reduce floor space by at least another 60,000 square metres.
