Wesfarmers (WES) 2016 AGM Report

Company/ASX Code : Wesfarmers Limited (WES)
Venue :
1pm Perth Convention & Exhibition Centre
Mounts Bay Road
Perth, Western Australia
Monitor : Mr John Campbell
AGM Details / NoM : Thursday 10th November, 2016
# of Attendees : 1187 shareholders plus 114 visitors
# Holdings represented by ASA : 2,101
Value of Proxies : $191 million
# Shares Represented by ASA : 4.64 million (equivalent to 13th largest holder)
Market Capitalisation : $45.7 billion

“Watch this space”

The Managing Director told the meeting that results to date in the 2017 financial year were encouraging with quarterly sales figures to September showing good growth in all divisions except Target which is going through a repositioning of its retail offering under new management.  Mr Goyder said Bunnings had increased sales by 7.4% in the quarter despite stock liquidation activities from the closing of Masters stores. Homebase in the UK had achieved $554m in first quarter sales, in line with expectations. We said that we understood it would take several years to transition Homebase to Bunnings-style warehouses but we were concerned this would be a drag on Bunnings earnings for that period. We were advised that it was expected that Homebase would trade profitably in 2017 and thereafter.  The first Bunnings-style warehouse will open in St Albans in the UK in mid-February with another three will open by the end of June 2017.

Coal operations had been hampered by wet weather in the first quarter but it was to be hoped that they would break even for the first half year with improved prices for both metallurgical and energy coal.  There were several questions raised about the effects of burning coal on global climate change in light of the Paris Accord commitments, and why WES continued to mine coal whilst espousing support for minimising the group’s footprint on world climate.  In answer to a question about continuing coal operations, the Chairman told the meeting that all businesses owned by the group were for sale at an appropriate price and that shareholders should “watch this space” as regards developments for the Resources Division.  Mr Goyder said that the group balance sheet remained strong and capable of taking advantage of growth opportunities.

Four directors were up for re-election and all were re-elected with 99% support, the resolutions approving the issue of performance rights to the executive directors achieved 94% support, whilst the remuneration report, which we voted against, was passed with a 10% ‘against’ vote.  We told the meeting that we viewed the WES remuneration structure as a good model in most respects but that a few aspects had slipped through in 2016 which concerned us.  One of these was the increase in STI as a percentage of fixed pay granted to executives and the other was the seemingly high proportion of STI based on ‘soft’ hurdles such as customer satisfaction, diversity, talent management and safety.