Department store Myer has revealed Bernie Brookes will stay on as CEO and managing director of Myer, as it continues to reach towards a merger with David Jones.
The company today confirmed it has reached agreement with Brookes to re-engage him on an ‘open term’ contract, despite the previously advised conclusion of his contract in August 2014.
The decision follows a move by Myer in October 2013, which saw the retailer to put forward a conditional, non-binding, indicative proposal for a potential merger of Myer and David Jones.
The proposal included a process to jointly agree appointments of Chair, Board composition, the CEO and other senior management roles, head office location and corporate name.
In regard to the proposal, Myer chairman Paul McClintock said Brookes appointment would put the company in a more favourable position.
“In order to provide leadership clarity at Myer, the Board has taken the view that ceasing the CEO search at this preliminary phase and re-confirming Bernie is in the best interests of Myer and its shareholders.
“While we have made clear the selection of the CEO for any future merged entity would be a shared decision by both companies, Bernie’s re-appointment provides us with at least one option for that role.”
“We continue to believe our proposal is attractive and compelling. However, it can only progress with the support of David Jones. To that end, I have written today to the David Jones chairman to reiterate our willingness to engage collaboratively on the unique opportunity to merge our companies in order to create significant value for our respective stakeholders.
“We hope that David Jones may come to a view that such a transaction as proposed, or indeed as they might wish to review with us, would be in the interests of both companies’ shareholders. We look forward to the opportunity to meet with David Jones in the future to discuss these matters,” McClintock said.
Commenting on his appointment, Brookes said he welcomes the extension of his role as CEO of the company.
“I am very pleased to be able to confirm my re-commitment to the CEO role at Myer. I continue to have a passion for retail, and Myer in particular, and believe there is much I can still contribute to the business. Should a transaction to merge Myer and David Jones be successfully completed, I can commit to presenting myself as a potential CEO for the merged entity.”
The key terms and conditions of Mr Brooke’s re-engagement are described below:
Term
The new contract is in the form of an ‘open term’contract and replaces Brookes’ current fixed term contract which was to expire in August, 2014.
Remuneration package
Brookes’remuneration includes his total fixed compensation (TFC) (being cash salary and superannuation), an annual short term incentive delivered in cash and equity and a long term incentive delivered in equity.
TFC
Brookes ’TFC is subject to annual performance based review and has been adjusted by 11.1 per cent to $2.0 million per annum.
Annual short-term incentive
Brookes is eligible to receive a target annual incentive payment equivalent to 120 per cent of TFC under the Myer Annual Incentive Plan for achievement against targeted performance. The short-term incentive arrangements provide for payments up to 150 per cent of TFC based on prescribed metrics. Subject to shareholder approval, 30 per cent of any annual STI awarded will be deferred into restricted stock for two years. At the discretion of the board, and subject to applicable law, this may be paid as a cash amount.
Long-term incentive
Subject to shareholder approval at the annual general meeting in November 2014, Brookes will be entitled to receive performance rights to the value of 30% of TFC. These will be granted broadly on the same terms as performance rights granted to other senior executives participating in the Myer Equity Incentive Plan(MEIP). Mr Brookes will be eligible to participate in future grants of performance rights under the MEIP, with any such grants being subject to shareholder approval.
Termination provisions
Myer may terminate Brookes’employment at any time by providing him with 12 months’ written notice or payment in lieu of notice (or a combination of these).
Brookes may terminate his employment by providing the company with six months’notice.
Brookes will not be entitled to any payments or benefits upon termination where that payment would lead to a contravention of the Corporations Act or the ASX Listing Rules.