The 2002 battle for Coles Myer

By Stephen Mayne
January 14, 2008

This is a chronological account of the Crikey coverage leading up to the dramatic 2002 Coles Myer AGM when Solly Lew was thrown off the board.


The numbers in this morning's papers are a bit confusing. We've been hearing all along how small investors control about 40 per cent of the company but then Leonie Wood wrote in The Age this morning that the top 200 shareholders control 90 per cent of the shares.

Solly sprinted to the Supreme Court last night to get the details of how the top 200 voted. With 127,000 of his own proxies, you'd think Solly would be in a reasonable position as Coles Myer only has 560,000 shareholders.

As a Premier Investments shareholder, Crikey was negligent to miss yesterday's AGM where Sir Ron Brierley said Premier would be calling an extraordinary general meeting to dump some directors.

All 11 candidates will be invited to speak at today's AGM which will probably go for at least 4 hours and will also probably be the best attended AGM in the history of corporate Australia. Bring it on.

Second sealed section November 20


It looks like the might of the Myer family, the Coles Myer Employee Share Plan and all those institutions ranging from AMP to QIC have toppled a billionaire.

However, at this point we only know the votes lodged by proxy 48 hours before the meeting.

Solly got 267 million proxy votes in favour, 294 million against and the chairman was voting 50 million open proxies against him.

This left Solly at 267m vs 344m but the silly old chairman Rick Allert did not disclose the open proxies held by people other than him.

The proxies only accounted for about 610 million of the 1.1 billion shares on issue. So there are about 500 million shares held unaccounted for and if these include the 115 million shares that Solly controls then he could yet scrape back in. However, the fact that Solly scampered out the back door and hinted he'd lost during his speech suggests that his 115 million shares were voted in the proxies. You don't usually get large chunks of stock voted from the floor but there might have been large open proxy votes used from the floor and people who vote by proxy can also revoke their vote on the day.

We had two and a half hours of general debate about the accounts which Sir Ron Brierley got up and said was a complete waste of time.

Then each of the 11 candidates were invited to take the lectern for about five minutes before fielding questions. Four of them failed to show.

Crikey's mate Peter Sheppard did the best of the outsiders with 66.4 million votes in favour and 233 million against before including the 80 million open proxies held by the chairman that also went against him.

Sheppo copped about seven questions so the resolution dealing with the election of directors dragged on for an additional two hours and 40 minutes before the five hour affair finally wound up at 3.10pm.

Solly was on his feet for about 50 minutes and was questioned by 20 different shareholders with the meeting broadly split.

However, I suspect the majority of the people who spoke for Solly or attacked other individual directors were stooges. I was the sixth person who spoke on the accounts and said that three of the first four were probably stooges. Afterall, even Michael Kroger's right hand man Jason Aldworth got up and sprayed the director sitting next to Solly, Patty Akopiantz.

I got up four times and asked about ten questions in total and Solly didn't take too kindly to it.

"I don't subscribe to your rubbish," was his opening salvo as he went on to apportion part of the blame for Yannon to PWC and Freehills, which are both still engaged by Coles Myer.

He refused to disclose the proxies he held but said every proxy he received was passed on so there was no filtering of the proxies against him.

After 127,000 shareholders replied to his yellow form, an additional 43,000 shareholders voted for Solly by proxy back to the company so Solly was able to gloat he had a mandate with 170,000 households supporting him.

Unfortunately, that leaves as many as 390,000 shareholders who opposed him and when I asked him to name one prominent Australian who was backing him, Solly claimed the 170,000 small shareholders were prominent.

Solly was also happy to spray former mate Nick Greiner when I referred to his comments about Solly getting off the board. "He should look at his own record," was Solly's response.

Solly's mate Mark Leibler threatened a defamation writ against a "Mr Paris" and kept on arguing he was a totally independent director. What a load of rot. Leibler was at the frontline of defending Yannon and has been a mate and legal adviser to Solly for decades. That is not what you call independent.

Unfortunately, the board's open proxies appear to have saved Leibler's neck and he's back on the board for another 3 years. The proxies went 276 million in his favour, 256 million against, but he was saved by the 80 million open proxies that were held by the chairman that went in his favour.

In other words, the chairman's open proxies have proved the difference between Leibler getting back and Solly getting rolled.


Our RMIT Intern Kate Jackson reports that it's Sionara Solly, as Coles Myer shareholders look to have given him the boot:

Solomon Lew's ally Mark Leibler has been returned to the Coles Myer board, but Solly will most probably lose his seat after a heated AGM in Melbourne today, in which the board and Solly in particular was accused of turning the flagship store, Myer, from a grand old lady into an old tart.

Coles Myer set up the Vodafone arena to accommodate 9000 angry shareholder, but only half turned up. Some had come from as far afield as Perth and Brisbane - others simply jumped on a tram from Solly Lew's headquarters on the 51st floor of 101 Collins St to throw a few grenades on behalf of their embattled billionaire buddy.

Early on it was apparent that the crowd from Solly's Century Plaza and Premier Investments vehicles were doing their best to stack the meeting. Crikey's own tall shareholder advocate had put on a suit to observe the democratic process at work but thankfully did not follow through with his early plan to run for the board.

But Crikey's first contribution to proceedings was to point out to the meeting that three of the first four questions to Chairman Rick Allert were very detailed and specific in their criticism of Fletcher and other members of the board. He asked for speakers to announce their allegiances as these previous speakers had obviously been Solly's stooges.

It was a suggestion which drew loud applause. Stephen also raised the matter of Rick Allert's conflict of interest, questioning whether the chairman should be on the audit committee when he was also until recently chairman of Southcorp, a major supplier of Coles Myer. He also wanted to know whether the board was going to follow the lead taken by companies such as BHP, Lend Lease and West Australian Newspapers in dumping director retirement packages for ex-chairman Stan Wallis and other non-executive directors.

Unhappy shareholders unleashed colourful speeches and passionate diatribes. Many were angry about the performance of the board and felt Solomon Lew's retail experience and dedication to the shareholder discount card was admirable. But one woman noted that Solly had been involved with Myer sine the 1980s and in that time she had seem the "grand old lady turn into a grand old tart."

A number of Solly's people spoke in defence of the discount card, saying it was not supposed to be a loyalty card - it was a privilege card for long suffering shareholders.

In his address to the shareholders, chairman Allert highlighted the performance of their largest and most profitable business, food and liquor. He also praised CEO John Fletcher's leadership and was careful to outline the reasons why the board wanted to phase out the popular shareholder discount card. To wit: such a scheme was not used anywhere else in the world, it was six times more expensive than other retail loyalty programs and it discriminated against customers who were not shareholders.

Altogether, Allert fielded 31 questions over more than two hours on the accounts alone. The audience was clearly getting restless waiting for the real action to begin.

This reporter had to leave before the re-election of board members was discussed, but wed like to give an honourable mention to the Gorilla Man standing outside the Arena. He got caught in traffic this morning on the way to the meeting, so not all of the shareholder would have been able to see the 2 x 3 metre sign he had made out of black and orange garbage bags. Both for those of you who didn't, Crikey is here to tell you it spelt out YANNON in large orange letters. Lest we forget.


Following the five hour meeting, the pack of journos had to wait another 45 minutes for Mr Allert and Mr Fletcher to appear for a rather bland question and answer session. They refused to comment on any results, but they stood behind the board's decision to stand against the Lew and the other independent candidates.

When asked if he was worried Solly would launch a legal challenge if he was not re-elected as expected, Mr Allert would only reply "that is a question for Mr Lew".

Mr Allert also refused to comment on any potential candidates for the now vacant board positions, saying he hadn't thought about it, as he didn't want to pre-empt the result of the vote. When pressed as to whether retail experience was an attribute the board would look for in potential appointees, he said it was but only one of many.

Finally Mr Allert was asked to sum up the message he had taken from the shareholders at the meeting. He said that clearly the shareholders are not happy with the results, but that is no surprise. He followed this up by admitting that everyone, including the board, is disappointed with the results.

Sealed section November 21


The papers are full of Coles Myer coverage but no-one has really got stuck into the retailing giant for the way they have handled the vote.

Printing 13 boxes next to 11 candidates was bad enough, but we have still not been given the final vote and it is now 15 hours after the meeting finished.

Coles Myer issued this statement last night but everyone at the ASX had obviously gone home since it is still not available on their website:

"Coles Myer tonight announced that ten of the 11 candidates standing for election had not polled a majority of votes cast.

These candidates were Peter Sheppard, Wilhelmus A J Boerkamp, Angelos T Kenos, Rodney D McRae, Lynette K Small, Jeffrey M Morris, Solomon Lew, Aldo Cunial, Desmond J Ryan and Kenneth H Allister.

The position in respect of Mark Leibler remained uncertain because Mr Lew did not vote his proxies during the poll. However, after the closure of the poll, a number of proxy votes held by Mr Lew were delivered.

The status of these votes remained uncertain pending advice but could only affect the outcome in the case of Mr Leibler.

If these votes were to be included, Mr Leibler would have polled a majority of votes cast.

Coles Myer will provide further advice to shareholders once this matter is clarified, including the final number of votes cast for each candidate.

The company would be asking the ASX to lift the halt on trading of its shares from the opening of trading tomorrow."

In other words, silly Solly was so stunned by the shellacking he copped during the 40 minutes he spent on his feet, that he forgot to vote his open proxies in favour of his mate Mark Leibler.

It is absolutely unacceptable that chairman Allert did not fully disclose the proxy figures at the AGM.

The listing rules require the disclosure of five figures: For, against, abstain, open proxies held by the chairman, open proxies held by others.

We have still only been told three of these figures so we don't even know the number of open proxies held at the meeting and these obviously included some of Solly's.

There will probably be a legal barney about this but Allert kept the poll open for a good 15 minutes and twice asked the shareholders if they had all voted before formally closing the poll.

If Solly's Leibler proxies came in after that then he is out.

The disclosure from Coles that only Solly proxies could save Leibler suggest one of two things:

1. there were more than 80 million open proxies and shares held on the floor which went against Leibler because he was 77 million in front on the proxies with 333 million in favour (including 67 million open proxies with the chairman) and .256 million against.

2. Large proxy vote in his favour were rescinded at the meeting and wouldn't it be amazing if this included Solly's 115 million shares. Maybe Solly was annoyed that Leibler claimed he would be independent from Solly and wouldn't be leaking him board information.


There was a wide range of opinions from Coles Myer commentators in the papers the morning after the AGM. All agree that Solly was close to winning and is not going to give up, but their opinion differs on his chances of success in the future.

The Australian included several pieces of analysis from their experts, each looking at a different aspect of the vote. Brian Frith discusses how close Lew came to winning re-election and breaks down the result.

Mark Westfield writes the 'board brawl is far from over' as Mr Lew is already acting like he controls the board, not a defeated candidate for re-election.

While Robert Gotliebsen writes that Coles Myer can finally move forward following the result and provides a positive forecast for the future.

The Financial Review, from the editorial on down, is broadly behind the 'gang of eight' on the Board.

It is the Melbourne-based commentators who put forward the view that yesterday's result was just a setback to Lew, rather than a serious defeat.

In The Age, Stephen Bartholomeusz writes as if Lew had won the vote, much less received only one vote in four, apart from his own shareholdings. He implies it will only be a matter of time before Lew successfully strikes back.

Fellow Solly supporter Terry McCrann also writes that Lew has a chance to take control of the Board, now that he is no longer a director, but admits that it could cost him a further $700 million in investment to stand a chance.

Malcolm Maiden, presents several different options which Mr Lew could take following the result, including legal challenges.

Elizabeth Knight gave us a slightly different perspective in the SMH.

The major story to emerge from the aftermath was that Lew had failed to lodge his proxies until an hour after the poll had closed. It is still unknown whether these votes will be counted and it is possible the Victorian Supreme Court will decide the issue.

An article on the front page of The Australian by Bryan Frith highlighted the importance of this issue and The Age had it high up in its main story in the business section. The other papers only mention a confusion over proxies so they appear to have missed the major yarn.

Second sealed section November 21


We sent our two Crikey interns Kate and Ben out to Battlestar Gallactica for the Rick Allert/John Fletcher press conference at midday and they report back as follows:

Rick Allert and John Fletcher faced the media earlier today, but were unable to give any indication of whether Solomon Lew's late proxy votes would be included.

Allert said his main concern was for "the efficacy of the poll". He said he had sought legal advice as to whether the votes could be included, and that he hoped it wouldn't be necessary to call an extraordinary general meeting, which would be inconvenient to shareholders and a big burden to the company in terms of cost.

Allert fielded most of the questions from the 15 or so journalists assembled at Coles Myer's Tooronga stronghold, and maintained that the inclusion of the late proxy votes would not affect the outcome of the poll for most the board members.

Solly would be leaving regardless and none of the other candidates had no chance anyway, with the exception of Solly's right-hand man, Mark Leibler. The inclusion of Solly's votes would ensure the re-election of Leibler, however, without them he would be joining Solly on the sidelines. Fletcher said little during the meeting, claiming that all he wanted to do was get on with his job and his five-year plan.

Allert revealed he had asked Solly whether or not he was going to vote, before the poll closed, and Solly had said no. It was not until later that Solly apparently had a change of heart and lodged his votes with Computershare. Allert also said that the ballot paper stuff up, which angered many shareholders on the day, was a printing error by Computershare.

We reckon it is absolutely clear that Solly's proxies should not be included and Leibler should be given the boot. Afterall, this is the guy who was Solly's chief defender during Yannon and has been on the board for almost 10 years of dreadful performance.

He was only saved by the chairman's proxies anyway. If the board had voted the open proxies in the same way as the vast majority of institutions and the Myer family, Leibler would have been out on his ear with only 42 per cent of the vote.