Myer keeps Brookes to tough it out

THE CHIEF executive of Myer Holdings, Bernie Brookes, has signed on for another two years at the department store retailer as it battles the retail slump and a dramatic dive in its share price.

By InvestSMART · 11 Aug 2011

By InvestSMART ·
11 Aug 2011

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THE CHIEF executive of Myer Holdings, Bernie Brookes, has signed on for another two years at the department store retailer as it battles the retail slump and a dramatic dive in its share price.

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.

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Frequently Asked Questions about this Article…

What change was made to Myer CEO Bernie Brookes' contract?

Myer extended Bernie Brookes' contract by two years — his term that was due to expire in August 2012 now runs until August 2014 after months of discussion between the board and Mr Brookes.

Why did Myer's board decide to keep Bernie Brookes on as CEO during the retail slump?

Myer's chairman Howard McDonald said the economic outlook remained "challenging" and that Mr Brookes was the "right leader" to steer the company through tough trading conditions, so the board agreed to extend his contract.

How much will Bernie Brookes be paid under the new Myer CEO contract?

Under the new contract Mr Brookes receives a 5.3% pay rise, taking his annual salary to $1.8 million including superannuation. He is also eligible for an annual cash bonus of the same amount if he meets certain targets, with the board retaining discretion over any payment above target.

What severance would Bernie Brookes receive if he were sacked?

If Mr Brookes is sacked under the new agreement he would be paid one year's salary, instead of the 18 months specified under the former contract.

What performance rights were proposed for Bernie Brookes and do they need shareholder approval?

Subject to shareholder approval at the October annual meeting, Mr Brookes would be issued $2.7 million worth of performance rights. Those rights vest only if investor return targets are met and if he delivers a succession and transition plan for the CEO role.

How have Myer shares been performing amid the retail downturn?

Myer shares hit a record low of $2 during a recent sharemarket tumult, later closing higher at $2.25. Over the past two years they have shed about 45% of their $4.10 float price, reflecting pressure from the retail slump.

What guidance has Myer given on its full-year profit and trading conditions?

Myer said it will unveil its full-year profit result in mid-September and warned last month that net profit could fall by as much as 5% from last year's $169 million because of tough trading conditions.

Does Bernie Brookes personally hold Myer shares or options?

Yes. 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.