6 questions asked at 2024 Eagers Automotive AGM

May 22, 2024

Here is the text of the 6 questions asked at the 2024 Eagers Automotive hybrid AGM held on May 22, along with a summary of the answers. There were no material protest votes at the 80 minute meeting and proxies were disclosed early with the formal addresses which contained a shock profit warning which drove the share price down 15% as the meeting commenced.

Q1. Well done on putting together a property portfolio worth $580 million. How often do we get the individual properties independently valued and with councils and state governments increasingly strapped for cash, are we at risk of facing increases in rates and land tax charges, particularly as the valuation of the portfolio rises. Given the current property bubble, have we considered doing a sale and lease back transaction that could free up capital for a major capital return to shareholders, special dividend or buyback that would utilise some of our excessive $555m in franking credits.

Answer: The question was butchered but the CEO stressed how they'd reduced the leased component of their network from 90% to 75% in recent years by building up a $700+ property portfolio, which is hugely valuable. Watch video of exchange via Twitter, plus these extra comments on how former CEO Martin Ward has been successfully consulting as a property scout for the business.

Q2. Could Nick Politis disclose how large his residual privately owned car dealership business is after the two transactions in the ACT and Melbourne totalling around $450m over the past 3 years. Are any more related party transactions proposals in prospect? Also, has Mr Politis pledged any of his 28% stake in Eagers Automotive to financiers of his private automotive operations or have all debts been extinguished by the recent largely cash transactions with our company?

Answer: The question was badly butchered, so much so that Mr Politis didn't say a word and chair Tim Crommelin just said that he adds enormous value and no further related party transactions are planned. Watch video of exchange via Twitter.

Q3. Could new director Katrina McNamara and the chair comment on the recruitment process that led to her appointment to the board. Was a head hunter involved, did the full board interview Katrina and did they interview any other candidates? Did Jane know any of our directors before engaging with the recruitment process?

Answer: No head hunter was involved and she was recommended by former CEO Martin Ward. Watch video of exchange via Twitter, plus these extra comments by the chair on the Martin Ward recommendation.

Q4. Could the chair and largest shareholder both comment on why the CFO Sophia Moore is on the board when the CEO Keith Thornton is not? Can you name another listed company that does this? Does this extra responsibility for the CFO influence how much the CFO is paid? Will you put the CFO up for election next year so that shareholders can endorse this strange approach to governance?

Answer: Chair Tim Crommelin explained that it was largely to satisfy independence quotas on the board and she was re-elected strongly last year. Watch video of exchange via Twitter, plus these extra comments by the chair on diversity drivers.

Q5. Mercedes had a win in the Federal Court last year when dealers unsuccessfully challenged its move to an agency model, similar to what Honda did in 2021 and how Tesla operates. What are the prospects of other major manufacturers moving to the agency model and are we prepared for such an eventuality?

Answer: This was asked by another shareholder but then the top table referenced my version to correct Tesla comment which sells direct to the public. The sentiment was that the dealer model is coming back as the cycle turns and manufacturers don't want to be stuck with excess stock. Watch video of exchange via Twitter.

Q6. The share price has dropped 17% to a 2 year low this morning in response to the earnings update. It is never good governance to surprise the market like this. How can we improve our systems and processes to never again shock the market like we did this morning and who will be held accountable for this continuous disclosure failure?

Answer: Question wrangler butchered it but chair stressed their processes were fine. Another similar questions came online at the end with no proper response, except a laugh when billionaire Nick Politis told the meeting he had just bought another 100,000 shares during the AGM. Watch video of exchange via Twitter.