Billionaire retailer Solomon Lew’s has lashed proxy advisors and shareholders after his retail company Premier Investments was hit with a rare protest vote over the company’s decision to issue dividends and executive bonuses while receiving JobKeeper payments.
In a statement following Premier’s annual general meeting on Friday, Mr Lew said it was “completely unclear” why 48.5 per cent of shareholders delivered the company a ‘first strike’, saying it was unjustifiable given the performance of the retailer over the past financial year.
“It’s clear that we have suffered a first strike against our remuneration report, but it’s completely unclear to me how it can be justified in relation to the outstanding performance that our board, CEO and management team have delivered,” Mr Lew said.
“What is clear is that this strike has been driven by some proxy advisors. I would remind them that remuneration is meant to reward performance and align management and shareholder interests.”
The resounding strike was issued following advice from major proxy firm ISS, which cited a slew of issues including excessively high remuneration for chief executive Mark McInnes and weak hurdles for the awarding of bonuses.
ISS also took issue with Premier’s lack of disclosure of the “true impact” of COVID-19 on the business, noting that the company received significant JobKeeper subsidies which boosted earnings and therefore boosted the level of bonuses awarded to executives.
“[Short-term bonuses] are based primarily on the Premier underlying EBIT results which was up 11.9 per cent on 2019,” ISS said.
“It is unclear how much of this improved result was driven by the higher online sales … government subsidies not fully passed on to employees or lease payments withheld during store closures.”
Premier claimed $68.7 million in wage subsidies across its business for the 2020 financial year. Mr McInnes received a base salary of $2.4 million in 2020, which was topped up by $2.5 million in short-term bonuses.
Mr Lew defended the bonuses awarded to Mr McInnes, pointing out they were in relation to his performance for the 2019 financial year, which was unaffected by COVID-19 and JobKeeper subsidies.
“Where management teams deliver outstanding results, they should be rewarded for doing so,” he said.
He also noted a strike would have been avoided if he had not abstained from voting in relation to the remuneration report. Mr Lew and his associated entities own 40.4 per cent of Premier’s shares.
While the strike against Premier will not result in any changes to executives’ pay this year, if the company receives a second strike next year investors will be allowed to vote for a spill of the entire board.
Shareholders also protested the re-election of board members Henry Lanzer and Michael McLeod, due to issues of independence and related-party transactions.
However, a vote to re-elect Mr Lew was overwhelmingly supported by investors, with 99 per cent voting in favour.
At the meeting, Premier also revealed its online sales for the first 18 weeks of the 2021 financial year had risen 70 per cent against the same period last year, a result the company attributed to record trading on Black Friday and Cyber Monday.
Mr Lew continued to tout the company’s online capabilities, which deliver “significantly higher” profit margins than the company’s bricks and mortar locations. “We have strong collections of wanted product for each of our brands, we have well-managed inventory, and we have already seen a very positive customer response to this season’s products,” he said.
“This, together with the reopening of borders in Australia and the recent reopening of our stores in England gives us reason to be optimistic during this all-important trading period.”
Premier’s shares were up 0.4 per cent at $22.92 at midday.
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Source: Thanks smh.com