Contrary news in the boardrooms of of Myer and Elders on Monday, with one unexpectedly losing and the other surprisingly retaining its CEO .
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Department store chain Myer (ASX: MYR) told the ASX on Monday that they would be looking for a replacement for current CEO John King, who has said he plans to return to the US in late 2024.
King will be hard to replace (Major Myer shareholder, Solomon Lew’s Premier Investments will have a big say in the new boss) after his effort in more than doubling the department store chain’s profit in the five years he has run the retailer.
On top of that Myer has resumed dividend payments to shareholders following the surge in earnings solid cost cutting by shrinking the company’s selling space.
Myer chair JoAnne Stephenson thanked the King for his “extraordinary contribution to the company” and said that at the end of King’s more than six-year tenure next year, he will have delivered a “remarkable turn-around in the positioning and performance of the business.”
In March, the department store giant posted profit of $65 million for the half – its strongest result in nearly 10 years and double the full financial year result in 2018.
King said he was confident in Myer’s people and future, but there was work yet to be done. “I am proud of what we have achieved so far with lots more to do, so it will be a busy year ahead,” he said.
Myer said the more than a years’ time until King’s departure would enable it to conduct a thorough local and international search for his successor.
Mr King started at Myer in June, 2018 (his appointment was revealed in April that year) when the retailer’s share price was 41 cents – yesterday’s close was 67 cents, so the gain for loyal shareholders from Mr King’s reign (so far) has been 63%. That’s a lot better than the near 20% rise in the ASX 200 in the same time.
2018 saw Myer lose more than $480 million – that compares with the $65 million profit reported earlier this year for the 2022-23 financial year.
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Mark Allison had been at the head of Elders (ASX: ELD) since 2014 and before that was the company’s chair and executive chair. He announced last November that he will retire from the company by mid-November this year – but no more.
Elders told the ASX on Monday that after “a comprehensive domestic and international search, the Board of Directors of Elders has agreed with Mr Mark Allison that he continue in the role of Managing Director and Chief Executive Officer of Elders.”
It looks like being for an extra two years, judging by the bonus deal he has been offered as part of his new pay packet.
Elders’ Chair, Ian Wilton, said in the statement, “We are very fortunate that we have been able to agree with Mark that he will now not retire from Elders and secure his continued service.
“This is an ideal outcome for Elders, its customers, employees and shareholders. Mark’s deep experience and understanding of Elders and agriculture both domestically and globally makes his continued service ideal for Elders.”
When Allison’s departure was revealed last November, Elders shares fell heavily as the company also revealed trading concerns with the impact of La Nina’s big wet and flooding on Elders businesses and outlook.
Earnings for the year to September, 2022 were solid but the combination of the departure and the commentary saw the shares plunge 23% on the day to $10.21.
Yesterday they rose more than 6% to a high of $6.86 on the news that the CEO is staying. They then eased over the session to end the day up 2.6% at $6.55.
Elders said the changes to his employment deal would see his base salary rising to $1.5 million from $1 million and he would get bonuses of $500,000 if he is still employed by Elders on June 1, 2024 and the same amount if he is employed by Elders on June 1, 2025.
As well he will get 90,000 share rights for each of 2024 and 2025 (if he is employed by Elders at June 1 each year. These have a current market value of more than $550,000 each at a share price of $6.55).
Mr Allision will continue in Elders short- and long-term incentive plans which in 2021-22 delivered him $929,000 in payments.
Allison’s total pay in 2021-22 was just over $2.6 million.
Elders chair highlighted the importance of retaining Mr Allison’s experience and knowledge as the company continues its systems modernisation and supply chain rationalisation projects. Mr Wilson added that the current CEO succession program will continue to focus on the development of suitable candidates.
Mr Allison said, “I am delighted to continue in my role as Managing Director and CEO of Elders. While I had been intending to retire from Elders, it was never my intention to cease serving the interests of Australian agriculture, and this country’s farmers, after my departure.
“As a result, I was very pleased to accept the Board’s invitation to continue in my role and am energised by the prospect of building on the hard work we have already done at Elders during my tenure.”
Mr Allison said in the statement that the Board will continue to work with him to develop the strong pipeline of talent in Elders’ senior leadership team.
