Harvey Norman executives take pay cut as crisis worsens

Harvey Norman has told shareholders the business will not pay an interim dividend and that its executive team and non-directors will forgo 20 percent of their salaries and director’s fees for three months.

“In the present environment, the board believes that preserving cash is the most prudent course of action to protect shareholder value,” company secretary Chris Mentis wrote in a letter to shareholders.

Australian-based Harvey Norman operates stores in Singapore and Malaysia, selling electronic and electrical goods and furniture.

The decision will keep A$149.5 million of cash in the business and comes two weeks after Harvey Norman revealed a 9.4-per-cent increase in comparable sales in its Australian stores for the period of March 1 to 17.

At the time, chairman Gerry Harvey told television program 60 Minutes that coronavirus could be an ‘opportunity’ for retailers in certain categories, noting that sales of freezers had quadrupled and air purifiers had doubled.

Public backlash was swift, and two days later Harvey admitted he was “mortified” that he had come off as a “heartless, greedy old bastard”.

“Now everyone thinks I’m this callous old bastard out making a profit on other people’s misery… but believe me, that was not my intention,” Harvey said.

“I was trying to give a positive view of the Covid-19 crisis.”

Harvey Norman was contacted but had not provided comment by publication.

The Harvey Norman board’s decision is made in the context of dozens of retailers entering a hibernation state amid a collapsed bricks-and-mortar retail sector, with customer confidence hitting an almost-50-year low.

ANZ head of Australian economics David Plank said confidence on current economic conditions had fallen almost 50 percent over the last two weeks to its lowest ever level.

“And many other aspects of the survey are exceptionally weak. The announcement of the largest fiscal package yet may stabilize confidence, but much will depend on how the pandemic evolves,” Plank said.