The Smage‘s details of Dawn Robertson’s pay packet
– $18 million over 3.5 years and growing – would rank her highly on any
list of the executives best paid for not succeeding. And that doesn’t
account for whatever golden parachute is awaiting her when Myer is
eventually sold.

Word comes to us from within a miserable Myer
that the key to department store success, good buyers who effectively
run the mini-businesses that add up to the whole, believe the best
thing to come out of the sale will be Dawn’s departure. They take for
granted that flicking Dawn will be the first action of any purchaser.

That
sort of feeling contrasts with the Coles Myer board’s tendency to throw
money at the expensive import in the great Coles Myer tradition of the
Dennis Eck failure et al. That generosity reportedly includes the sort
of sweetheart options reprising that should outrage shareholders:

In late 2002, Mr Fletcher also agreed to change Ms
Robertson’s contract to allow all of her stock options to be purchased
at $6.44, whereas previously she was going to be tied into a price of
$7.66 per share. Coles Myer shares finished trading at $10.20 – meaning
if Ms Robertson’s remaining 1.5 million share options were sold
yesterday she would have pocketed up to $5.6 million in profit.

What
seems to have particularly outraged key buyers is the alleged
surrendering of retailing management to accountants. I’m told an
indication of store management in trouble is any sale that promises “X
per cent off everything” in a particular division.

In the
widget department, for example, the buyer might have his or her best
lines performing well, expecting to clear them all at full margin
before the new season, while those not selling as well would be
targeted for discounting at sales and promotions time. (Wiley buyers
also will build in rebates from suppliers when goods are discounted to
clear.) Half the justification for select promotional discounting is
that customers coming to the store for the sale might well be induced
to still buy the top-selling full-priced widgets.

But under
Dawn, the buyers’ best laid plans (and their own potential bonuses)
have at times been undercut by an order from the bean counters for
across-the-board discounting – all widgets 25% off. The buyers watch
their margins walk out the door as their best performers inevitably are
the first to go.

There are other problems in a long history of
Myer troubles attributed to or not fixed by Ms Robertson. Myer’s
performance has improved since she was hired, but not by much and
certainly not by enough for Coles Myer to keep the chain.

And have a look here for an interesting US view on how Americans run Australian retailers.

Peter Fray

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