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Hallenstein’s board too long in the tooth despite strong performance: NZSA

 The New Zealand Shareholders’ Association will vote to re-elect two of Hallenstein Glasson Holdings’ long-serving directors but says the company should be looking for fresh blood.

Chair Warren Bell is up for re-election and has been on the board for 32 years since 1986, as is former chief executive Graeme Popplewell who has been on the board for 33 years since 1985.

“Hallenstein Glasson has a very mature board with an average tenure of almost 20 years – the four longest-serving average over 30 years,” NZSA said in advice for members.

“In addition, we note that Graeme Popplewell was chief executive until 2017. The association believes former CEOs should generally not join the board until two or three years after they retire to give the new CEO an ability to manage the business without their predecessor is sitting in judgement,” it said.

Nevertheless, NZSA said it is comfortable CEO Mark Goddard has been in the job long enough to have found his feet.

“As would be expected from the long tenure, the board has a good depth of industry experience but it needs to consider how it can ensure its membership is renewed and refreshed in the future.

“In particular, we would like to see some younger board members who reflect the aspirations of the company’s customer demographic rather than relying on management alone,” it said.

“We made similar comments last year and remain concerned that Hallenstein is vulnerable to several long-standing directors potentially having to stand down in short order.”

However, it does seem the board is paying some heed to the need to refresh itself – the other director up for election, Mary Devine, was appointed as recently as July this year.

The notice of meeting provides no information for shareholders on who Devine is. The lack of biographical details on any of the directors – shareholders aren’t even told Bell is their chair – is another matter on which NZSA takes the company to task. Hallenstein Glasson “needs to do better than this.”

NZSA steps into that breach by informing its members that Devine is a former chief executive of Ezibuy and Max Fashions and currently sits on the boards of Briscoe Group, Meridian Energy, IAG New Zealand, Christchurch City Holdings, Foodstuffs South Island and Foodstuffs New Zealand.

On the resolution to re-elect Bell, NZSA said that “we are concerned at the length of Warren Bell’s tenure and disappointed that there has been no indication of succession planning. Whilst we will support his election, we do expect the board to address this matter of some priority.”

Despite its criticism, NZSA noted that the company’s “performance and returns to shareholders is one of the very best in the fashion industry. The company is conservatively run, carries no debt and has moved into the digital era relatively seamlessly.”

Despite the yardsticks NZSA uses to assess companies and their boards, “we have to acknowledge the great results and, on balance, this has informed our voting intentions.

Hallenstein Glasson’s annual shareholders’ meeting will be held on Wednesday, Dec. 12.

Earlier this week, Hallenstein Glasson said it’s finding the going tough and that sales for the first 17 weeks of the financial year are 4.8 percent ahead of the same period last year.

Sales in the first eight weeks of the financial year had been up 7.2 percent, the firm said on Sept. 28 and for the first 17 weeks of the previous financial year the company reported a 15 percent increase in sales and an improved gross margin.

Hallenstein, which was founded in 1873 and merged with Glasson in 1985, gets almost a third of its sales in Australia, where it is expanding having sold its unprofitable upmarket Storm womenswear chain in April.

The company had 30 Glasson stores and three Hallensteins outlets in Australia at the end of July - out of a group total of 112 in the two countries. 

Glasson founder Tim Glasson is the largest of 5,500 shareholders with 20 percent.

Hallenstein Glasson shares are down 10 cents, or 1.9 percent, at $5.30, but they have gained more than 50 percent in the past 12 months to the benchmark NZX 50 Index’s 6.9 percent gain.

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