Myer keeps Brookes to tough it out

After months of discussion between the board and Mr Brookes, Myer confirmed his contract, which was due to expire in August 2012, would now extend to August 2014.

The announcement came a day after Myer shares hit a record low of $2 during Monday's sharemarket tumult. Although they have since recovered ground, closing 6? up yesterday at $2.25, Myer shares have shed 45 per cent of their $4.10 float price in less than two years.

The chairman, Howard McDonald, warned yesterday that the economic outlook remained "challenging" but said Mr Brookes was the "right leader" to steer the company through.

Myer, due to unveil its full-year profit result in mid-September, said last month its net profit could fall as much as 5 per cent from last year's $169 million due to tough trading conditions.

Under his new contract, Mr Brookes will receive a 5.3 per cent pay rise that takes his annual salary to $1.8 million including superannuation.

He will also be eligible for an annual cash bonus of the same amount if he meets certain targets. Previously, he was eligible for a bonus of up to 200 per cent, but Myer said the board's discretion would now apply to anything "above target payment".

If Mr Brookes is sacked, he will be paid a year's salary instead of 18 months as it was under the former contract.

Subject to shareholder approval at the annual meeting in October, Mr Brookes will also be issued with $2.7 million worth of performance rights, to be vested only if investor return targets are met and if he delivers a "succession and transition plan" for the chief executive role.

According to a director's interest notice lodged in March, Mr Brookes has a direct or indirect interest in more than 11 million Myer shares and almost 7.4 million options.