Hammer and Tongs at Woolies
ON THURSDAY I watched in amazement as the top executives at retail giant Woolworths got all hot under the collar at the annual general meeting (AGM) because its franchisees aired their grievances in public and dared to (oh my golly gosh) challenge for a board seat.
The franchisees seem a determined (and disgruntled) bunch, and I doubt the best diplomatic efforts by Woolworths could have averted a public showdown at the AGM.
But Woolworths’ efforts at damage limitation were downright awful, and I certainly walked away from the AGM with my perceptions of the firm as an idealistic and forward-thinking corporate dramatically altered.
The top executives came across as aggressive, impatient and less than accommodating when it came to shareholder enquiries (see separate item below).
From what I can ascertain, a number of concerned Woolworths franchisees had been engaging the Woolworths board since the beginning of November around making a nomination to the board.
These are small retail operators, their respective businesses situated in small towns or the quieter city ‘burbs. In short, they are worried about a change in strategy at Woolworths around franchising (see Franchise drama at Woolies AGM).
The franchisee nomination would be in place of Peter Bacon, a highly respected businessman in the gaming and leisure sector. But, nonetheless, an executive with limited retail experience.
As far as I can ascertain, the franchisees’ representative, Dennis Hamer, went out of his way to ensure due process was followed in signalling an intention to nominate a director.
Woolworths, it seems, went out of its way to ignore the franchisees. It appears a last-minute effort was made to head off a confrontation when Wooltru chairperson Buddy Hawton agreed to meet the franchisees on the morning before the Woolworths AGM. But this, I hear, was on condition that they withdrew their nomination to the board.
Hamer, pushed forward as the nominee after the original candidate withdrew his nomination (purportedly after a friendly chat with Woolworths executives), apparently refused to withdraw the nomination.
Still, one can’t deny it was abundantly clear to the Woolworths board that there would be a nomination to challenge the re-appointment of Bacon.
Why then were shareholders – who, after all, have to vote on board appointments – not informed of developments? How can a company ignore a shareholder’s request for board nomination?
Did the Woolworths board think it could keep a lid on the matter, perhaps forcing the franchisees to withdraw their nomination in exchange for opening lines of communication on their various predicaments?
When the resolution on re-appointing Bacon came around at the AGM, I was not surprised to hear Hamer asking for it to be withdrawn. I mean, what else do you do if your nomination – which I stress (again) appeared to follow due process according to Woolworths’ articles of association – is seemingly swept under the carpet?
I was, though, blown away by the lame response from Hawton, who claimed the nomination by the franchisees was “invalid”.
No explanation was given for this, save for the fact that Woolworths had sought legal opinion on the matter.
Frankly, this sounds like a desperate last line of defence.
Proving the nomination invalid will be most interesting to see in the upcoming challenges, which Hamer intimated would be undertaken with much vigour.
Let’s also see if the JSE runs to protect minority interests. What an irony if the passed resolution re-appointing Bacon to the board is actually invalid.
No buddy of Mrs Gilmour
One perhaps has to reserve a smidgen of sympathy for Buddy Hawton.
Not only did he have the franchisees pressing him at the Woolworths AGM, but he also had to contend with the irrepressible Mrs Gilmour.
Mrs Gilmour (who steadfastly refuses to give her first name to Fin24) is a fixture at the AGMs of most Cape-based companies – or at least the better ones.
Mrs Gilmour, though, is not one to follow the usual AGM protocol. She does not always raise her hand, and mostly interjects even before the relevant director has properly answered an enquiry. In fact, it could be argued that her contribution to an AGM is far too “conversational” (for want of a better word).
But Mrs Gilmour – as she so often does – had a point regarding the appointment of new directors to the Woolworths board.
Woolworths nominated two new directors, Lindiwe Mthimunye-Bakoro and Thina Siwendu, as non-executive directors.
While the Woolworths annual report does offer short CVs on the nominated directors, Mrs Gilmour was adamant that the duo briefly explain how they intended adding value at the company.
Hawton initially suggested that Mrs Gilmour chat to the new directors at tea-time. That was not acceptable to Mrs Gilmour, who wanted more information on the nominated directors before she voted.
Again she urged Hawton to let the two prospective directors speak – even for just a few minutes. Hawton indicated he was uncomfortable, arguing that it “was not the normal thing to ask a new director to speak” at an AGM.
Mrs Gilmour was unrelenting, prompting Hawton to respond in exasperation: “You can’t ask a director what value they add… not even an executive director. How do you quantify it?”
In between exchanges, Mrs Gilmour sneaked in the suggestion that Woolworths should perhaps have a representative from its body of franchisees on the board.
It did not take long for franchisee representative Dennis Hamer – who made a valiant (but vain) pitch for a board seat – to enthusiastically volunteer: “I would like to stand up and tell people what value I can add.”
Boardman to the board
As I’ve indicated, Mrs Gilmour was in fine form at Woolworths AGM, and we have her to thank for one of the few lighter moments during the tense proceedings.
Delivering her stinging opinion of the Woolworths board composition, she noted that non-executive director Mike Leeming was a director of Nedbank when (as she put it) the bank had to be rescued by Old Mutual.
She remarked cattily: “I would hate Woolworths to go the same route as Nedbank.” Hawton was sharp enough to rescue the situation by pointing out that “people learn from their mistakes”.
Mrs Gilmour then opined that perhaps Woolworths should look to putting soon-to-retire Nedbank CEO Tom Boardman on board as a director.
“He’s coming back to Cape Town, and he has retail experience.” That’s true, and those that remember the old Boardmans will know that Tom learnt plenty lessons in retail.