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Harvey Norman narrowly avoids first strike

harvey norman bondiThe board of Harvey Norman has narrowly avoided a so-called ‘first strike’ from shareholders, with a large vote going against its executive pay package at the retailer’s annual general meeting.

At Thursday’s meeting in Sydney, 23.29 per cent of shareholder votes went against the adoption of its remuneration report – just shy of the 25 per cent needed to constitute a strike.

Two consecutive strikes can lead to a potential board spill.

Harvey Norman’s co-founder and executive chairman Gerry Harvey was re-elected to the board with a clear majority, however 15 per cent did vote against his re-election while about 28 per cent voted against the re-election of chief financial officer Chris Mentis.

This follows the Australian Shareholders Association’s protests over the board’s lack of renewal, with the shareholder body claiming Harvey Norman has no true independent directors given its two independent directors have been in place for more than 12 years.

The ASA believes directors who have served 12 or more years identify too closely with the company and executives and are not best equipped to represent shareholders’ interests.

All motions at the AGM were carried, however, and shares in Harvey Norman finished the day higher, after the electronics and furniture retailer released a trading update late Wednesday afternoon.

Sales across its franchisee network of its three brands – Harvey Norman, Domayne and Joyce Mayne – in Australia were up 4.8 per cent during the first eight weeks of the 2018 financial year.

Comparable sales rose four per cent compared to the same period a year ago.

Total sales from the group’s Australian franchisees and its wholly owned stores in New Zealand, Slovenia, Croatia, Ireland and Northern Ireland – plus majority-owned stores in Singapore and Malaysia – hit $2.45 billion during the four months to October 31.

Shares in Harvey Norman gained 14 cents, or 3.7 per cent, to close at $3.91.

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