Savage Attack As David Jones Shareholders Revolt Over Plan To Chop Discount

Savage Attack As David Jones Shareholders Revolt Over Plan To Chop Discount

The Age

Saturday November 29, 2008

VANDA CARSON

THE chairman of upmarket retailer David Jones was on the back foot after a shareholder revolt over the company's decision to axe its long-standing store discounts to shareholders, replacing them with an offer to sign up for rewards through its new credit card.

There was a similar backlash when Coles Myer scrapped its scheme in 2004.

Robert Savage was also on the defensive yesterday over his pay and that of the company's other non-executive directors. One shareholder asked the board to consider cutting its pay, because the retail industry was struggling and the share price had fallen 48per cent in the past year.

Asked if he believed he was overpaid, Mr Savage said he was not. He earned $379,020 in 2007-08.

More than 16 per cent of shareholders also showed their displeasure with a proposal to increase the fee pool for non-executive directors from $1.8million to $2.3 million by voting against it. The increase, which was passed by shareholders, comes just two years after the last increase.

Mr Savage could not reassure shareholders that he would not request another rise in 2010.

He said the larger fee pool was "like an insurance policy" and might not be used.

"Right now is the most difficult time to recruit good, experienced, qualified directors that I have ever seen," he said.

A further 13.5 per cent of shareholders voted against the issue of "retention rights" to chief executive Mark McInnes and chief financial officer Stephen Goddard to ensure they did not defect to rival retailers. One shareholder said "management's decision to get into bed with a low-grade credit card company", referring to the deal with American Express where cardholders must pay a $99 annual fee for a credit card.

He said many retailers imposed a surcharge on customers paying with American Express.

Mr McInnes later said the credit card company had agreed that it would ensure that customers could use their cards at about 94 per cent of retailers surrounding David Jones stores without being hit with the fee.

Mr Savage said the credit card was a "significant source of profit" for the company, and Mr McInnes said the take-up of the credit card was "much better than we expected".

About 70 per cent of customers who had signed up for the new credit card were existing store cardholders, he said. Of these, half had also decided to keep their store card. The shareholder discount of 2 per cent will end in February and save the company $2 million.

Shares in the company have fallen 48 per cent in the past year, less than its discretionary peers at 59 per cent, but more than the S&P/ASX 200 Index.

Mr McInnes said the company's dividend this year could be flat, at 27.