Retailer David Jones has borne the anger of shareholders, incurring a first “strike” at its annual general meeting and setting up a potential board spill.
The heavy vote of nearly 40 per cent against the department store chain’s executive remuneration report followed weeks of turmoil in which CEO Paul Zahra announced his resignation and questions were raised about the timing of the purchase of shares by two directors.
David Jones chairman Peter Mason acknowledged the vote on the remuneration report, which went 60.47 per cent in favour and 39.53 per cent against, telling shareholders the board had received its first strike.
“We note the concerns of shareholders,” he said.
Mr Mason had addressed investor dissent during his speech at the start of the meeting, at which point proxy votes were already heavily against the report.
“The feedback we have had in the lead-up to this meeting and the proxies received have made it very clear that we have more work to do in engaging with shareholders and proxy advisers regarding the company’s approach to remuneration,” he said.
After the meeting Mr Mason and Mr Zahra both declined to speak to media.
Under corporate regulations, a first strike is incurred when a company receives a vote of 25 per cent or more against its remuneration report.
Another 25 per cent or more vote the following year means a second strike, triggering a vote on whether the board should be spilled and a new election of directors held.
Earlier at Friday’s AGM, Mr Mason apologised to shareholders over concerns about two board members buying shares in the company days before it released better than expected sales figures.
David Jones directors Leigh Clapham and Steven Vamos bought shares in the retailer just three days before it told the market sales in the first quarter of the current financial year grew slightly.
Some shareholders have questioned whether the transactions complied with corporate governance guidelines.
Mr Mason said the matter has been referred to the corporate watchdog, the Australian Securities and Investments Commission (ASIC).
“I unreservedly apologise to the company and all our shareholders for the concerns that have been raised on this matter,” he told the company’s annual general meeting.
“Your board is committed to the highest standards of corporate governance and therefore took the decision to raise this matter proactively with ASIC following media comment.”
Mr Mason said the two directors were “motivated by a wish to show support for the company”.
The company has also come under shareholder pressure due to Mr Zahra’s decision to stand down from the company, as soon as a replacement is found.
Mr Mason said speculation that Mr Zahra and the board were not working well together was untrue.
“Comments that the timing of the announcement of his intention to resign will impact his and your company’s focus on the important Christmas and January sales period underestimate Paul and his team,” he added.
Mr Zahra said the company had never been better prepared for a Christmas trading period.