When it comes to questionable governance or controversial practices, you can always rely on 81-year-old billionaire retailer Gerry Harvey to deliver the goods. And so it was with yesterday’s first ever online Harvey Norman AGM.
Despite repeated requests, Harvey Norman has refused to webcast its AGM in previous years and doesn’t even produce a transcript, so there is no record of what happens besides any media coverage.
And after a decade of protest votes from proxy advisers and independent shareholders, Gerry still hasn’t fixed any of the governance issues — the board is still dominated by five executive directors, the opaque dealings with franchisees are not consolidated, and the individual valuations of the $3 billion-plus property portfolio are not disclosed.
The media coverage of yesterday’s AGM focused on Gerry’s comments that he wants to live to 100 and follow Rupert Murdoch’s lead by remaining as chair until he’s at least Murdoch’s age of 89.
Gerry also had aspirations to do a Rupert by trying to get his AGM done as quickly as possible with no video recording of the proceedings.
He rattled through his chairman’s address in less than 10 minutes without inviting his wife, CEO Katie Page, to say a word.
It was then straight into questions, where be borrowed from the playbook of another billionaire, Seven West Media chairman Kerry Stokes, by not having the moderator read out the name of the shareholder submitting the written questions.
After last year’s extraordinary two-hour insult-fest, the board clearly had a tactic of jumping in whenever Gerry looked like losing it. The decision to keep shareholders nameless seemed designed to stop Gerry from exploding.
The only problem with this tactic was that it meant I was able to type more than 20 written questions into the system that were read out before Gerry cottoned on.
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There were originally intended to be 14 items on the agenda but items nine to 13 were withdrawn (check out the mind-numbing detail from pages 13 to 45 of the notice of meeting) when the company botched the calculations on a proposed incentive grant of 4.75 million performance rights potentially worth $21.5 million for the five executive directors.
A miscalculation resulted in the already not-very-challenging performance hurdles being only 20% of what they were intended to be. After this was pointed out to them, Harvey Norman walked away blaming “a drafting and calculation error” in this November 10 ASX announcement.
The alternative would have been an embarrassing defeat because Gerry wasn’t able to vote his own shares on the proposal.
Remuneration committee chair Ken Gunderson-Briggs took complete responsibility for the stuff-up at yesterday’s AGM where the protests votes included a 29.5% against vote for the finance director and company secretary Chris Mentis, whose signature was on the notice of meeting.
The voting results also showed an 11.5% protest vote against the remuneration report, coming off the back of last year’s second strike.
While it was great to crack 20 questions for the first time at an online AGM, a few of them were censored by the moderator.
For instance, the following question: “Harvey Norman makes a big song and dance about its support for women’s sport, but of all the 13 top executives in the annual report only one is a woman. Could both [non-executive director] Luisa [Catanzaro] and Katie Page comment on what the company is doing to promote female executive talent?”
Was cut back to: “Mr Chairman, would Ms Catanzaro or Ms Page comment upon what the company is doing to promote female executive talent?”
It wasn’t until we got to my 15th question, related to a resolution proposing a constitutional change to allow small shareholders to be mopped up, that we finally got a bite from Gerry with this exchange:
Question: “As the proud owner of 23 shares, if this resolution passes are you planning to try and wipe us small shareholders out?”
Gerry Harvey: “Is that Stephen Mayne? It would be a pleasure, Stephen.”
Having asked 16 of the 18 questions during formal business, I was expecting Gerry to quickly wrap things up, but after a five-minute break he came back and introduced a general questions session which was capped at 30 minutes. Bonus.
After lobbing another five questions, Gerry’s answers were getting shorter and shorter and after a one-hour AGM, this was the one that finally sent him over the edge:
Question: “Most real estate investment trusts with exposure to retail have slashed their valuations to reflect the different rental environment. With our franchisees receiving $15 million in JobKeeper are these values attributed to these properties sustainable?”
Gerry Harvey: “Yes”
After CFO Chris Mentis jumped in with a more detailed response, the bear awoke:
“Excuse me, is this Stephen Mayne asking all these questions? … Hang on, I just want to know. He’s asking all these questions, one after the other. He’s allowed two questions. Stephen if you’ve got one more question to ask we’ll answer that and no more.”
The moderator then asked one about why Gerry felt he’d been so strongly supported with more than 94% of the votes in favour of his re-election.
“I have no idea,” he barked, before launching again:
“That’s the end of the questions from Mr Mayne, if there are questions from any other shareholders we’re happy to take them. Mr Mayne has asked too many questions as it is and we’re not prepared to answer any more questions. He is well known as the village idiot and should remain as so.”
As you’d expect from Harvey Norman, the webcast of the AGM has been buried so there’s no record of what happened. And next year we’ll probably return to the physical AGM with no webcast at all.