DJ board cops 'first strike' from investors
The David Jones board was smacked with a strongly supported "first strike" as investors registered their displeasure over controversial share trades by directors, and the untimely resignation of chief executive Paul Zahra.
At the shareholder meeting in Sydney on Friday, nearly 40 per cent of shares voted on the company's remuneration report were directed against it.
Another vote of 25 per cent or more next year triggers a resolution to spill the board. This would then require more than 50 per cent of shares voting for the spill to go ahead.
The annual meeting was widely expected to be the target of investor dissatisfaction, especially in regard to suspicions that a breakdown in the relationship between the David Jones board and chief executive led to the resignation of the well regarded Mr Zahra.
The retailer's chairman Peter Mason, offered investors plenty of apologies - but took no blame - for allowing two board members to buy shares in the company days before the release of better-than-expected sales figures.
"I unreservedly apologise to the company and all our shareholders for the concerns that have been raised on this matter," he told investors. "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."
David Jones directors Leigh Clapham and Steven Vamos bought shares in the retailer just three days before it told the market underlying sales in the first quarter were positive, which sent the stock soaring.
Mr Mason said the two directors were "motivated by a wish to show support for the company".
Mr Mason also rejected claims Mr Zahra's decision to step down as soon as a replacement is found reflected a breakdown in his relationship with the board.
"Comments that the board and Paul are not working together collaboratively towards your company's success are untrue," Mr Mason said.
Mr Zahra said he "continued to work collaboratively with the board and with my management team while my successor is identified".
Mr Mason and Mr Zahra declined to comment after the meeting.
An adverse finding by ASIC could leave the company with an embattled chairman and lame duck CEO at a time when its investment in an omnichannel strategy is at a critical juncture.
The retailer has raised gross profit margins by exiting low-margin categories, outsourcing others - such as electronics - to Dick Smith, and reducing promotional discounting.
No earnings guidance was offered on Friday but the company reported that its online business delivered a profit contribution in its first year of trading. It said the average online transaction was three times that of in-store transactions. The company also promoted the potential development of its property portfolio but warned the process would take time.
David Jones tried to head off the first strike against the remuneration report by announcing a 17 per cent cut in the base fees for its non-executive directors and freezing the pay of its executive team.