Harvey Norman has copped a staggering vote against executive pay as the white goods retailer posted a 7.8 per cent decline in sales over the last five months, during which consumers became more conscientious about their shopping decisions.
The overwhelming majority, some 81.8 per cent of the retailer’s shareholders, voted against the company’s remuneration report at its annual general meeting on Wednesday, where executive chairman and co-founder Gerry Harvey launched a blistering attack on a representative from a retail shareholder association.
Harvey Norman chairman Gerry Harvey launched an attack on the Australian Shareholders Association and copped a strike against its remuneration report.Credit: Dean Sewell
“How did you get this job?” Harvey said to former Australian Shareholders Association (ASA) chair Allan Goldin in response to questions about the remuneration report. “Can you ever be positive about anything? You’re a negative bastard,” he said to other questions about franchise operations and revenue.
ASA, a non-profit association representing retail shareholders, expressed concerns about the board’s independence and pay transparency. It did not support the remuneration report, the re-election of chief financial officer Chris Mentis, the performance rights (bonuses) of Harvey, his wife and chief executive Katie Page, executive director David Matthew Ackery, chief operating officer John Evyn Slack-Smith, and company secretary Chris Mentis.
“ASA’s major problem … is that the Remuneration Committee who created it cannot in all fairness be considered independent,” ASA said in its voting intentions report. “It was thought before the commencement of the 2023 year that there was going to be underperformance on the prior year, but to make sure that the executive directors still got a bonus in a poor year they just lowered the entry target.”
Harvey told this masthead that the company’s management should “absolutely not” bear any responsibility for the overwhelming strike against the remuneration report, arguing that its remuneration was comparatively low compared to other ASX companies. The executive pay strike is not the first for Harvey Norman: in 2019, the company suffered a second strike, but avoided a board spill.
“It’s just ridiculous,” Harvey said. “The proxy adviser should take full blame.”
Harvey Norman’s share price has not suffered from the strike or the declining sales numbers, with investors sending the share price up 3.6 per cent in afternoon trading.
The $4.6 billion white goods retailer also operates in New Zealand, Slovenia, Croatia, Ireland, Northern Ireland, Singapore and Malaysia. Australia was Harvey Norman’s worst-performing market between July 1 and November 25, with sales down 11.6 per cent along with a 2.6 per cent drop in New Zealand.
Harvey Norman opened one new store in the ACT and four new stores in Malaysia, with Harvey defending the company’s strategy to double down on investing in physical showrooms.
Harvey said the retailer’s Black Friday sales had been “very strong”, but conceded it was impacted by high traffic volumes that saw its website slow to a “snail’s pace” between 8am to 8pm on Friday.
“We lost quite a lot of online business,” he said, adding that many people who couldn’t make purchases online came into a store or phoned the customer line.
Harvey said he would be asking the IT department why the website lagged given it had received similar traffic levels in previous Black Friday and Boxing Day sales. “I don’t think it’ll happen to us again, I’ll bet anything.”
Harvey Norman tends to target the middle higher-income consumers, who tend to be older with more money to spend. Over recent months, Harvey said the average transaction price had diminished, with Australians who might normally spend $3000 on a fridge, washing machine or TV opting to spend $2000 instead.
“They are a little more careful with their dollars,” he said. “We obviously try to attack the middle-to-upper more because your average selling price is higher and your margin’s better, and you’re selling a better product … We’re spending a lot more money on our stores with presentation, so we’re concentrating strongly in that area.”
Meanwhile, online-only furniture and homewares retailer Temple & Webster released a trading update on Wednesday which showed their sales jumped 23 per cent over a similar period, with customers spending $17.4 million across the four-day period of Black Friday and Cyber Monday, representing double what they spent last year.
The digital retailer, which is popular with millennials and has become a major alternative to flat-pack giant IKEA, enjoyed a 500 per cent profit jump during the COVID pandemic-induced online shopping boom, but lost the wind in its sails when lockdowns unwound and people started spending more time outdoors.
Temple & Webster chief executive Mark Coutler argued that the online-only business would be more attractive to customers in a tougher economic environment.
“As customers feel poorer, they’re seeking more value. Online is a better value channel,” he said.
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