Insiders At Harvey Norman Pocket Millions Despite COVID-19 Pay Cuts
The inside shareholders at Harvey Norman who have delivered record growth during COVID-19 are set to walk away with millions despite taking a pay cut earlier in the year.
Apart from thousands in shares that are set to deliver a dividend of $0.18 CEO Katie Page and Directors David Ackery and John Slacksmith are set to pocket close to $7M and that’s before share dividends and incentive payments.
Chairman Gerry Harvey’s total remuneration last financial year was $858,953, while Ms Page’s total remuneration increased to $3.32m, from $3.03m. For 2020, Mr Harvey did not receive any short-term performance cash incentives, while Ms Page had a short-term cash incentive of $998,073.
Base salaries of Directors David Ackery and John Slack Smith was $1,999,970 each. They also got top up bonuses and dividends from their shareholdings.
Additional bonuses for directors came in at $3.4 million.
Some observers claim that Harvey Norman could be facing another fiery annual general meeting because of the ‘cash splash’ for insiders and after failing to significantly modify its executive pay despite ongoing shareholder concerns.
Back in 2019 the money splashed out to directors copped a significant backlash from investors, with 47 per cent voting against the proposal in a ‘second strike’, triggering a board spill vote.
In response, Harvey Norman’s remuneration committee, led by non-executive director Ken Gunderson-Briggs, commissioned an independent review of its remuneration package for the 2020 financial year.
This time round the record sales and increased profits the insiders have delivered could soften the blow claim analysts.
Gunderson-Briggs said he was “hopeful” the new report would pass the scrutiny of investors and proxy firms and defended the slight modifications, saying the company had adhered to all the recommendations made by the independent auditor.
In the past shareholders expressed concern over the high fixed remuneration of executives, along with the financial metrics used by the company when granting short-term bonuses.
The independent review found Harvey Norman was required to pay higher executive salaries than the median due to the size of its business compared to other retailers. It also recommended the company expand and refine the group of companies used as comparatives when assessing the board’s remuneration.
As a result, the committee deduced that the executives’ level of base pay and bonuses for 2019 was reasonable and that the long-term incentives were actually “underdone” and should be extended.
In 2020 Katie Page took home a remuneration package of $3.3 million for the year, a $300,000 increase on the prior year.
Gerry Harvey, the executive chairman and co-founder of the retailer, received $858,000 in remuneration for the 2020 financial year alongside $100 million in dividends from his 32 per cent shareholding in the listed retailer.
The company’s executives forgave 20 per cent of their salaries for three months over April to June due to the COVID-19 pandemic.