Woolworths in eye of a storm
The board endorses the CEO as well as overall strategy despite some setbacks and disappointing results for 2017 financial year
Woolworths chairman Simon Susman told shareholders at Tuesday’s annual general meeting that the board was confident of the group’s Australian strategy. "We believe in the strategy and we believe in Ian [Moir, the CEO] and his team … but we are in the eye of the storm," said Susman.
Moir said the board "thoroughly believes" in the overall strategy but acknowledged the execution of that strategy "has let us down in some areas".
Despite the disappointing financial 2017 results and the almost halving of the share price over the past two years, only one institutional shareholder attended the meeting and quizzed the board on the group’s performance.
Asief Mohamed of Aeon Investment Management also wanted to know why Moir, who had driven the multibillion-dollar acquisition of the Australian retail group David Jones, had been paid a R15m retention bonus, while other senior executives had received only modest incentive awards.
Tom Boardman, chairman of Woolworths’ remuneration committee, said the retention payment was in line with the group’s remuneration policy and was "fair and appropriate" in terms of benchmarking exercises done by the committee.
Boardman said because Moir’s responsibilities were split between SA and Australia, the benchmarking exercise had to make provision for Australian levels of remuneration. As Moir’s family remained in Australia, his cost base was more weighted towards Australia than SA and this had to be taken into consideration, said Boardman.
In response to Mohamed’s question about the pay gap between the highest paid executives and shop floor employees, Boardman said inequality was a fundamental issue about which the board was passionate. The committee was tracking the gap between employees and it would soon be obliged to disclose it, he said.
Moir told the meeting management was doing everything it could to secure a recovery in the share price. The drop in the share price was partly due to the market and to management.
"The retail environment is changing dramatically, it is much more difficult to compete," said Moir. His team was building a business that would be able to compete sustainably in the future. "It takes a long time to get there," Moir said.
Despite the disappointing results and slump in the share price shareholders voted overwhelmingly in support of all but two of the resolutions put to the meeting. The reappointment of EY, which had been group auditor for 85 years, was opposed by 19% of shareholders.
The Government Employees Pension Fund is the group’s single largest shareholder with a 14.4% stake and has a policy of voting against reappointing auditors when they have served for long periods.
The resolution approving the issuing of shares and granting financial assistance for share-based incentive schemes was also opposed by 19% of shareholders.