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Harvey Norman Facing Real Risk, AGM Set To Be A Spark Fest

Harvey Norman Chairman Gerry Harvey is facing a real risk that shareholders could turn on him with demands for “truely independant” Directors to appointed to the board, questions are also set to be asked about questionable investments and the money that is being poured into franchisees.

Currently the Australian Shareholders Association claims the board is stacked with “friends of Harvey Norman” and directors who are not independant or at “arms length” to Chairman Gerry Harvey or the Company.

Among those singled out for attention is John Slack Smith the same Harvey Norman executive who was caught out last week lining his pockets with discounted shares that he has now been forced to sell.

He is also currently the Chief Operating Officer at Harvey Norman. Also in the spotlight is Gerry Harvey’s son Michael and long time associate Chris Brown who is a lawyer who insiders claims controls the destiny of the Company. Brown is the senior partner of Sydney based Brown Wright Stein Lawyers.

Harvey Norman Director & COO John Slack Smith.

The estate of Ian Norman, who co-founded Harvey Norman with Gerry Harvey in 1987, has now fallen under the management of Brown, since Norman’s death four years ago.

That mystery over the trusts and financials surrounding this Harvey Norman shareholding has remained a mystery even after two approaches by ASIC seeking more public disclosure from Brown, the executor of the trust the shares are held in.

The ASA claim that these directors cannot be considered independent or even “independent of mind”.

Shareholders are also set to question Harvey Norman investments in non-core businesses, loans to franchises and partners, the independence of directors and lack of board diversity.

According to the AFR the Australian Shareholders Association plans to vote against Harvey Norman’s remuneration report, raising the risk of a first strike after a near-miss in 2017, when 23.4 per cent of shares votes were against the report, slightly below the 25 per cent required to trigger a strike.

The ASA has also raised concerns about loans to 50 per cent owned KEH Partnership, which runs The School Locker, loans to Harvey Norman’s loss-making mining camp venture, losses from an investment in a Byron Bay resort and rising non-trade debt receivables or loans to franchisees, $105 million of which are past due and $63 million of which are impaired.

Today Harvey Norman shares are languishing at $3.10 back in August they were at $3.79 as shareholders question the future of the Company to deliver growth.

The ASA’s have already given Harvey Norman notice that they will vote against the remuneration report and we’re still considering voting on the other matters,” said Ms Murray-Jones.

“We do prefer to have directors who are independent… and we’ve asked them to look at board renewal and a succession plan.”

Gerry Harvey fended off criticism from the ASA last year, saying: “We just made a record profit and you want to get rid of people who made that profit.”

However, he will not be able to rely on the same defence this year. Harvey Norman shares have fallen 30 per cent this year after net profit fell 16 per cent to $375.4 million and the company raised $164 million at a massive discount to reduce debt.

 

 

 

 

 

 

 

Lawyer Chris Brown

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