Lew v Myer title fight postponed but training in full swing
Solomon Lew’s window of opportunity to nominate his handpicked directors to join the Myer board at this year’s annual meeting has closed - prolonging the Lew v Myer title fight until near the end of the year.
The Lew camp says it can’t get directors to sign up to joining the Myer board because potential candidates are unsure about Myer’s financial situation until a fully audited set of accounts are produced later this month.
While this means Lew has missed the window to nominate directors to stand at Myer’s November annual meeting, he has firmed up in his resolve to call an extraordinary general meeting to undertake a coup.
Lew hasn’t abandoned his campaign - he will regroup the troops ahead of another onslaught.
Myer board won’t raise the white flag and continues to battle
If the decades-long history of Lew’s corporate stoushes is a guide, Myer can be assured that if he loses a battle he won’t declare defeat in a hurry. Lew has the money and the willpower to wage his war of attrition.
Myer’s position was clearly bolstered a few weeks back when it supplied a trading update on the full-year profit to the end of July that suggested it was in better shape than most had expected. According to the update, the retailer managed to turn a net profit in the 2021 full financial year of $47 million to $50 million.
This was just the ammunition Myer needed to push its case against Lew. Despite the disruptions from COVID-related store closures, the department store retailer remained profitable under the existing board and management.
Lew’s Premier Investments increased its holding in Myer to 15.77 per cent in July, and he’s gunning for the entire board to be removed. In part, he was relying on the support of 7.7 per cent shareholder Wilson Asset Management whose principal, Geoff Wilson, has been an outspoken campaigner in other corporate dust-ups.
But Myer now seems to be hopeful that Wilson may decide to back its incumbent board.
For his part, Lew still thinks that Wilson will vote for board renewal given he has already supplied Lew with a few wishlist candidates. A wily investor, Wilson generally doesn’t formally signal his intentions before time.
Myer is also hopeful that the updated trading will garner support from Investors Mutual which now owns a little under 5 per cent of Myer.
It will come down to the lobbying efforts of both sides. Lew has already got a copy of the shareholder register and may campaign directly to small investors to vote with him at the EGM - a tactic he has used previously.
But before Lew can proceed with plans to requisition an extraordinary general meeting of shareholders in December or early next year, he will need to come up with a list of strong board candidates.
It is fair to say that Myer would not be the most sought after board seat among A-list directors looking for a resume stuffer.
Meanwhile, although Lew isn’t putting up candidates at Myer’s annual meeting, he is planning to vote his stake against the re-election of its existing board. Given Myer’s notice of meeting has not yet been released we don’t know which of the three current directors drew the short straw.
It is fair to say that Myer would not be the most sought after board seat among A-list directors looking for a resume stuffer.
At the very least the annual meeting will provide a taste of how voting will fall at the EGM that Lew has said he will requisition.
The opposing camps have two months until November 4, to push their positions.
Myer will release its full audited accounts this month but more importantly should provide shareholders with some kind of update on trading conditions in the first eight weeks of the new financial year.
Unfortunately, this period will have been heavily impacted by lockdowns in the two major markets of Sydney and Melbourne so Myer’s online revenue performance will be a crucial guide to its performance.
The shareholder politics will take centre stage this year but behind the scenes Myer has employed the services of corporate adviser, Luminis’ Ron Malek, to work on ways to improve shareholder value. He is evaluating the possibility of a restructure involving its online and loyalty businesses. Details are sketchy and the work is in the early stages, so this isn’t expected to factor into any decisions made by shareholders at the AGM or EGM.
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