Some of David Jones' biggest shareholders are preparing to use next week's annual meeting to agitate the board to reinstate outgoing chief executive Paul Zahra to the top job.
The looming protest vote is set to become a critical test of investor confidence in chairman Peter Mason.
Several institutional investors are understood to be planning to vote against the remuneration report and the election of director Leigh Clapham this Friday.
They will get the chance to ask the board why the corporate regulator, the Australian Securities and Investments Commission, is trawling through email communications between Mr Mason and directors Steve Vamos and Mr Clapham regarding the two directors buying shares before the release of the company's quarterly sales - an announcement that was tagged as price sensitive.
Shareholders are faced with a choice between Mr Zahra and the board - two of which bought shares during a period in which they were in possession of information that may have been price sensitive.
Under normal circumstances these acquisitions may have stayed under the radar. But with combatants facing off, the behaviour of the directors and potential errors of judgment move to centre stage.
The 6.6 per cent gain in David Jones' share price in response to the release of the quarter sales number supports the shareholders' view.
Elizabeth Knight— Page 4