Retail boss Gerry Harvey has blasted activist shareholders at Harvey Norman's annual general meeting, calling those who oppose him as "idiots" and responded to suggestions the publicly listed company is run like a family business as "bull***t".
The fiery meeting in Sydney yesterday regularly descended into a shouting match, with shareholders yelling at proxy holders to "sit down" and to "sell your shares" when the board was criticised.
In his opening remarks, Harvey lashed out at corporate activist Stephen Mayne and representatives from the Australian Shareholders Association as "agitators" whose sole purpose was to disrupt the company's performance.
"Suggestions independent directors are not independent because they've been around for over 10 years is absolute bull***t," he said. "They've been around a long time, they know the company. Why would we discard them?"
"What idiots to make up these non-existent rules. It's such a shame to be forced to distract from the reporting of the business's operations and performance to respond to those who agitate for their own purposes."
Mayne has vocally criticised Harvey, claiming the company fails to adhere to the necessary governance responsibilities required of a company listed on the Australian share market.
The corporate activist ran a protest nomination to join the Harvey Norman board to highlight its lack of transparency and independent directors, which is helmed by Harvey's wife Katie Page as chief executive.
But when it came time to vote on the ultimately unsuccessful bid, Harvey cited an article produced by Mayne in 2001 which featured a "sleazy list" ranking female politicians in terms of physical attractiveness.
"Are you a sexual predator?" Harvey asked of Mayne, invoking gasps and nervous laughter from the crowded room at the Tattersalls Club.
The chairman addressed the audience: "No … he's not? … or he's not admitting to it?"
Mayne has said he won't pursue legal action against the retail boss's sensational claims from the public forum, where he was then "gagged" and refused an opportunity to respond.
"I was quite shocked at how insulting and personalised the attacks were and not focusing on the issues," he told news.com.au following the AGM.
"To get a full frontal attack and then to be gagged was obviously very undemocratic and disrespectful of free speech. To concoct a smear by calling someone a sexual predator, what's the point?
"He's just very abusive and disrespectful."
One of Harvey's supporters and shareholders in the audience told the chairman he was "lowering his standards" by resorting to the unfounded claims against Mayne, but the chairman told news.com.au the potentially defamatory spray was borne out of frustration.
"He's never said anything nice to me in 25 years; he's always consistently attacked me so I'm just sick of it," Harvey said.
"Someone, maybe rightfully, says you shouldn't attack someone personally.
"But when someone consistently attacks you personally over such a long time, do you just let them get away with it? There's a whole heap of people who said 'get into the bastard because he deserves it'.:
Regulations to silence 'agitators'
The Harvey Norman chairman called for regulations to restrict access to minority shareholders after complaining the AGM was hijacked by "agitators".
"Someone like Stephen Mayne can go and buy 20 shares in Harvey Norman and come and disrupt a meeting. That shouldn't be allowed," Harvey told news.com.au.
"Their prime purpose was to disrupt our meeting, cause damage to the company and try to enhance their own reputations.
"This can't continue. It's unacceptable that people like this can gain a platform and have a say where they shouldn't."
Mayne said the fiery event was the most "abusive and insulting" in the 500 AGMs he says he's attended in more than 25 years.
"I just thought it was unnecessary. Gerry's very undemocratic, intolerant of criticism and he should be more respectful to alternative views and minority shareholders," Mayne told news.com.au.
"It was a remarkably insulting and combative and uninformed performance, and it's just refusing to admit there are any legitimate issues raised by his shareholders.
"It's just an incredibly dictatorial approach. It's Gerry's way or the highway."
Threat of a board spill
Harvey Norman faces a potential board spill after shareholders handed the furniture and electronics retailer a second consecutive strike on executive pay.
The company's remuneration report was voted down by 47.6 per cent of proxies at yesterday's meeting in Sydney, well above the 25 per cent threshold for a strike and forcing a vote on whether to spill the board.
Just over 50 per cent of shareholders rejected the remuneration report at last year's AGM.
Yesterday's vote came after Harvey Norman revealed its Australian business has been its second worst performing unit so far this financial year in terms of sales growth.
Australian franchisee comparable sales for the four months to October 31 were just 0.4 per cent higher than a year earlier.
That compares to a 1.7 per cent rise across the whole business, with only Singapore – where sales fell 8.1 per cent – performing worse.
The sluggish local sales growth was announced a day after Australian consumer confidence was shown to have slumped to a four-year low following a clutch of gloomy economic data.
Three Reserve Bank rate cuts since June and federal government tax rebates have failed to stimulate consumer spending, with retail sales growth slowing to a seasonally adjusted 0.2 per cent in September from 0.4 per cent in August. Northern Ireland, Slovenia and Croatia, and Ireland all showed comparable sales growth of more than 8 per cent, with New Zealand not far behind at 7.7 per cent.
Malaysia, the remaining territory in which Harvey Norman is active, showed 4.2 per cent growth.
After an early drop on Wednesday, Harvey Norman shares climbed through the meeting and vote on pay and were 0.1 per cent higher at A$4.325 at 12.25pm AEDT.