Morrisons chief executive Dalton Philips and outgoing chairman Sir Ian Gibson were subjected to a tidal wave of shareholder anger, including a pointed attack from former chairman Sir Ken Morrison, at a fractious annual general meeting today.
Sir Ken started by attacking Philips’ presentation, joking: “Since retiring I’ve decided to fatten cattle. I have something like 1,000 bullocks and having listened to your presentation Dalton… you’ve got a lot more bullshit than I have.”
“If you can’t run the core business, how can you run an online and convenience business?”
Sir Ken Morrison
Disputing a number of board strategy initiatives, including the level of dividend payment, selling off the “family silver” with store disposals, and “ill-judged” IT investments, Sir Ken questioned the future of the current board.
“We need a rapid and sustained effort to return to being a better value operator. Can the present management deliver this? I fear not.”
Sir Ian and Philips had earlier apologised and taken responsibility for a “disappointing” set of results. Morrisons reported last month that like-for-like sales excluding fuel fell 7.1% in the 13 weeks to 4 May.
But Sir Ken called the performance “not disappointing, but disastrous” and raised concerns over the board’s ability to lead the company back to growth. “If you can’t run the core business, how can you run an online and convenience business? I find that extremely concerning - you’ve got to demonstrate you can do it because I don’t believe it.”
Philips had earlier told the packed room at Morrison’s HQ in Bradford that institutional shareholders had given the board’s growth plans – centred on price, online and convenience – “widespread support”.
However, support in the room was scarce, with a series of shareholders holding the board to account for a slump in sales and profits for over three hours.
Also highly critical was Sir Ken’s nephew and former Morrisons corporate affairs director Chris Blundell.
“It was a very slick performance Dalton, but unfortunately the figures don’t back things up,” he said.
“It was a very slick performance Dalton, but unfortunately the figures don’t back things up”
He criticised the board for focussing on convenience and online while being guilty of “great neglect” in terms of the core supermarket business. He also welcomed Sir Ian’s decision to stand down and dismissed the credentials of anyone on the current board to take his place.
“We are in a rescue situation here and it needs urgent action… we are losing our reputation and reputation is everything in business.”
Sir Ian Gibson countered: “To say we’re in a rescue situation is totally wrong”, pointing to significant double-digit increases in turnover and profits over the last few years. “It’s a very sound business that’s in the process of growing, with margins comparable with the rest of the sector,” he said.
In advance of counting votes in the room, the company announced that almost 14% of shareholders voting by proxy had voted against Philips’ reappointment.
Sir Ian announced before the AGM this would be his last year in the role; 10.9% of proxy shareholders voted against his reappointment.
There was a more significant shareholder revolt over the company’s pay policy. In total 26.5% of proxy shareholder votes rejected Morrisons’ executive remuneration plans for the coming year.
UPDATE 6 June: The proportion of votes against Philips’ re-election increased to 15.4% once the votes of shareholders present at the AGM were tallied, while the proportion against Sir Ian rose to 12.3%.
Almost 90% of shareholders approved the 2013/14 remuneration report, but the higher proportion voting against the remuneration policy (remaining at 26.5% in the final tally) reflected concerns that senior execs remain entitled to bonuses despite the company’s poor performance.
Under the pay policy, 60% of exec bonus payments are based on profit targets, while 20% each is based on “strategic corporate scorecard measures” and “personal objectives”.
Philips was entitled to a bonus of £374,000 last year under these latter measures, but decided to waive the payment. His basic salary remained unchanged at £850,000 per annum (plus pension benefits).
At the meeting Sir Ian defended the remuneration policy, noting that the strategic and personal objective-based bonus targets had been brought in on the advice of shareholders.