Proxy adviser Institutional Shareholder Services has recommended against the election of Solomon Lew’s candidate to the Myer board.
Lew, who holds a 23 per cent stake in Myer through his Premier Investments, has nominated Terry McCartney to join the board of the company.
McCartney is a longstanding director of Premier Investments. If Lew is successful, this will mark the first Premier seat on the board, an ‘in’ that Lew has been attempting to get for six years.
The ISS warning to its clients is the first public attempt to stop Lew’s candidate from getting on the board at next month’s annual general meeting.
Earlier this month, Myer’s board opted not to recommend the election of McCartney, saying “the board considers that this is a matter to be determined by the shareholders, without a recommendation of the board”, noting it would “need to be satisfied that existing and potential commercial conflicts of interest are able to be managed in accordance with Myer’s policies and an appropriate protocol agreed with Mr McCartney.”
ISS said in a report released this morning that Premier Investments had failed to mount a case in McCartney’s favour.
“Should Mr McCartney be elected as a director, he will join the board as a non-independent director nominee of Premier,” the report reads.
“Accordingly, the board will comprise four independent non-executive directors and two non-independent non-executive directors, bringing the level of board independence to only 67 per cent. The board, however, will remain majority independent.
“A vote against this resolution is warranted because Premier has failed to provide compelling rationale and has not presented sufficiently compelling arguments as to how the appointment of their nominee to the board would contribute to long-term shareholder value, and whether this would satisfy any skill deficiencies which the board does not presently have.
“Furthermore, non-associated shareholders may have concerns regarding matters raised by the board that Premier failed to acknowledge two of its fundamental policies that the board should comprise majority of independent directors with an independent chair at all times, and that Premier should not acquire or obtain control of the company unless through a takeover offer to all shareholders.”
A spokeswoman for Premier Investments said ISS turned down a meeting with McCartney earlier this month, and is surprised by the “bizarre conclusion” it has since reached.
“Notwithstanding the lack of engagement, on the facts alone it is hard to see how ISS reached its recommendation when Terry’s skills and retail experience are clearly additive to the current board composition. The Myer board does not question Terry’s credentials,” the spokeswoman said.
“As a Premier director he is part of a team that has grown profit by over 160 per cent since his appointment in 2016. Also, as a former managing director of Myer Grace Bros he delivered the company’s record profit and has specific department store insights and experience – something no other Myer non-executive director has.
“Smart shareholders will exercise their own discretion in voting their shares.”
The Myer AGM will be held on November 10.
