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Gerry Harvey In For Torrid AGM, Move To Spill Directors

Gerry Harvey who suffers from verbal diarrhoea at the best of times could be in for a torrid time next week when he fronts the annual general meeting for Harvey Norman.

Internally management who have delivered a turnaround at the CE and appliance retailer have told ChannelNews that Gerry Harvey’s “Verbal sprays” at Annual General Meetings are “Bad for the Company”.

At next week’s meeting Australian Shareholders Association monitor Allan Goldin who Gerry Harvey once described as “God you’re a pain in the arse,” is set to ask several questions relating to the performance of the Company who recently got a warning letter from the Australian Securities and Investment Commission(ASIC) regarding an investigation into the Companies accounts.

In an exclusive interview with the Australian newspaper which is owned by News Corp a Company who rake in tens of millions dealing with Harvey Norman one would have been left with the impression that Harvey Norman had come away from the recent investigation with a clean bill of health.

See story here.

What the Australian newspaper failed to reveal was that ASIC’s Doug Niven, warned the Company that the commission may review subsequent financial reports as part of its ongoing surveillance program of Harvey Norman after suspending their investigation into the 2016 accounts and the way that franchisees were treated on the books.

“This letter should not be construed as providing assurance that the financial report complies with the accounting standards and other financial reporting requirements of the Corporations Act 2001,” Mr Niven said.

Gerry Harvey also told other critics to “Piss Off”.

“Nor does this letter limit our ability to raise further concerns with Harvey Norman regarding the financial report or any of its subsequent financial reports,” he added.

Goldin who Gerry Harvey has described as being a “stooge” of short sellers out to destroy the company was told in no uncertain terms to leave the last AGM.

At next week’s AGM Goldin is bracing for another showdown with the retail boss when the ASA plans to vote proxies against the re-election of Mr Harvey, non-executive director Graham Paton and finance director Chris Mentis because of the lack of board independence.

​The AFR Claims that ASA also plans to vote against Harvey Norman’s remuneration report and ask some pointed questions about the board’s decision to cut the dividend payout despite record profits, seek details about loans of $535 million to franchisees, and query investments in non-core businesses such as dairy farms and mining camps.

The ASA believes Harvey Norman still has questions to answer about its financial reports, even though the Australian Securities and Investments Commission has suspended its investigation into Harvey Norman for the time being.

In a letter sent to Harvey Norman late last month, ASIC said it might review subsequent financial reports and raise further concerns.

ASIC’s move followed changes to the way Harvey Norman treats loans to franchisees. In 2017, in what analysts believe was a response to the ASIC investigation, receivables from franchisees fell from $943 million to $535 million after Harvey Norman “reiterated” that franchisees were responsible for paying suppliers and Harvey Norman would no longer guarantee their debts.

The ASA’s objections are unlikely to carry much weight, given Mr Harvey’s popularity with the company’s retail investors, who account for almost 70 per cent of the shares not held by Mr Harvey, managing director Katie Page and the estate of co-founder Ian Norman.

At last year’s annual meeting, for example, only 0.7 per cent of the shares voted were against the remuneration report.

Goldin told the AFR “I agree in many respects it will be an exercise in frustration”.

However, he said it was important to keep asking questions about Harvey Norman’s board independence, remuneration structure and the treatment of franchisee loans and losses, saying that proxy advisers and institutional investors eventually took notice.

“Come December [Harvey Norman’s] board will be totally non-independent,” Mr Goldin said, citing ASA guidelines that deem directors who have been on a board for more than 12 years to be no longer independent.

“I can’t think of another ASX200 company that has a totally non-independent board.”


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