Myer Holdings has extended the term of chief executive Bernie Brookes’ contract to August 2014, saying he’s the right man to continue delivering the department store chain’s growth strategy.
Mr Brookes’ previous contract was due to expire in August 2012, but was expected to be extended in the meantime.
His fixed salary had been increased 5.3 per cent to $1.8 million per annum, the Melbourne-based company said in a statement today.
Under Myer’s long-term incentive payment plan, and subject to shareholder approval at the annual general meeting in November this year, Mr Brookes will be entitled to receive performance payments up to $2.7 million.
Myer chaiman Howard McDonald said the contract extension provided the company with stability and continuity of management.
He said the economic environment was likely to continue being challenging in the short-term, requiring a highly experienced retailer such as Mr Brookes, who wanted to see through his commitment to Myer’s growth plans.
Mr Brookes said Myer’s investments in the business since 2006 placed the company in good stead to weather the consumer spending downturn.
‘‘We are well positioned to benefit when consumer sentiment improves,’’ he said.
Morningstar Equities analysts recently said they didn’t find much comfort in such platitudes, warning that consumers would continue to rein in spending for the rest of the year, despite high employment.
Myer’s demographic was less resilient than that of the more upmarket David Jones and would be more susceptible to cost of living pressures like higher fuel and utility bills, the analysts said.
Consumers preferred to address debt and meet regular living commitments, Morningstar said.
However, the analysts noted restructuring at Myer under Mr Brookes’ stewardship had helped revive the business after years of underinvestment, with plans to add more than a dozen new stores over the next five years to more than 60 outlets existing currently.
Aside from poor consumer sentiment, Myer has suffered from the ongoing threat of internet shopping.
The company last month reiterated a forecast dip in net profit for the 2010-11 financial year of up to 5 per cent, from $169 million last year.
Shares in Myer were up 6 cents, or 2.7 per cent, at $2.25 today, in line with the broader market's rise.
Myer in late 2009 raised $2.2 billion from its initial public offer of shares priced at $4.10 each, but the scrip slipped when the company re-listed in November that year.
Months later, Mr Brookes said Myer’s former private equity owners prematurely listed the company with an eye to equity market conditions rather than sustainable earnings growth.
He later said it took a lot of time to manage shareholder expectations.
The shares have been on a downward trajectory since a closing peak of $3.99 on September 21 last year.
AAP