#stephenmayne

Harvey Norman Derangement Syndrome

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CM attended today’s Harvey Norman (HVN) AGM as an observer. This was a 2-hr lesson in HVN Derangement Syndrome by a handful of shareholder activists.

Two key takeaways – 1) there was overwhelming shareholder support for reappointments to the board, & 2) agitator and activist Stephen Mayne did little more than draw the ire of the audience as he rattled off what he believed to be a value-added commentary on the company’s approach to governance and supposed lack of independence, neither which he made a credible case for.

The ultimate irony expressed by Mr Mayne was his confession that he and his proxies would be voting FOR the reappointment of CEO Katie Page as a director, despite his constant interjections at the questionable state of governance at the firm. Seems 91% of shareholders want her to stay. Hardly a vote of no confidence.  Surely if he believed the board is the worst on the ASX for governance, why own shares at all? Crikey!

The flipside was the proposal for Mayne’s appointment to the HVN board received a 91% rejection by shareholders, reflective of their desire to maintain a winning formula. Chairman Gerry Harvey quipped, “who are the 8% of shares that voted for you?

Perhaps the area of focus by the media will be when Gerry Harvey decided to demolish Mayne by running through his trail of digital footprints, including one which described the activist ranking Aussie female politicians by looks with lewd comments such as “oozing sex and fun”, “very very tasty” and “dark, sensual and very attractive.” The chairman questioned whether Mayne was a “sexual predator?” Inappropriate? Whatever one’s personal view, Harvey and most present won’t be losing any sleep over it. Mayne can’t complain at being deprived of time on the microphone. Harvey was harsh but more than fair. It was not lost on anyone.

Mayne said to the media afterwards that, “He’s the worst in the market for governance and he’s only proved it here.” CM only hopes for more Gerry Harvey’s in the market. The leaders that don’t bend to all of the ridiculous woke causes which prioritise irrelevant factors over shareholder returns. As we pointed in an earlier CM, those industry super funds which prioritise social responsibility have all underperformed the ASX200.

It was hard not to be impressed by the global expansion. Katie Page ran through the enhanced footprint throughout Malaysia, Singapore, Ireland, Croatia and the poshing up of stores domestically to a premium standard.

This company has 18% compound returns since its listing. Dividend yield at present is 8%. One for the SMSF. This is a quality business. Management has conviction. There is a tangible track record.

Who on earth would want the likes of an activist who has now been rejected 50 out of 50 times to join ASX boards to occupy a spot at HVN? With such a resounding defeat, will Mayne sell his minuscule shareholding and move on? There are plenty of companies that will indulge Mayne’s desire for woke practices. This was nothing more than a display of Harvey Norman Derangement Syndrome.

ESG Blacklisted portfolio

ESG (Environment, Social Responsibility & Governance) blacklisted stocks. We all know deep in our hearts that vices are far more fun than virtues. Real Coke tastes better than Diet Coke. Full cream is better than skim. McDonald’s fries are tastier than mashed potato. CM made this point in yesterday’s piece on the irresponsibility of socially responsible investing for building a retirement nest-egg given the long term underperformance.

When all of this politically correct ESG investing meets a recession, these oversold anti-ESG darlings, many with gobs of free cash will look like total bargains. Suffice to say in a downturn, vices tend to be what people resort to.

All CM cares about is the G in ESG. Governance is a must for investing. E & S are merely subjective views which don’t automatically convert to shareholder value. Good governance goes without saying.

So perish the thought that CEOs, like Harvey Norman’s Katie Page are being attacked by the likes of Ownership Matters which thinks putting in a shareholder activist who has failed 49 times out of 49 to be appointed to ASX listed boards is a better bet? As Janet Albrechtsen of The Australian wrote,

A copy of the report obtained by The Australian reveals Ownership Matters has recommended that Stephen Mayne be elected to the board of the retailer, even though the 50-year-old has no corporate experience in retail or property, no corporate board experience and no corporate management experience…Harvey Norman has a market capitalisation of $5.2bn, and shares in the retailer have gained more than 32 per cent over the past year, outperforming the 16.4 per cent gain in the benchmark S&P/ASX 200 over the same period…The advice sent out on Monday has baffled Ms Page’s husband, the business’s billionaire co-founder Gerry Harvey, who remains its largest shareholder, retaining ­direct ownership of almost a third of the company. “I have been on a public company board as chairman since 1972, and I have never seen anything as bizarre as the fact that the best ­retail executive in Australia is to be replaced by a ratbag called ­Stephen Mayne who has been a proven failure … every time he’s run for a board seat,” Harvey said.