Michael Hill takes new founder president role within the jewellery chain
Michael Hill [NZX: MHI], founder of the jewellery chain of the same name, has been appointed to a new role of founder president.
At the annual meeting of Michael Hill International in Auckland today, shareholders voted to appoint Mr Hill into the new role, which will allow him to sit on the board for five years without needing to seek re-election.
Mr Hill stood down as chairman today, replaced by his daughter Emma Hill, who told shareholders her father had always wanted to be addressed as "Mr President."
The founder president title was seen by the board as a fitting recognition of his special connection with the company he founded in Whangarei more than 35 years ago. Today it has nearly 300 stores in Australia, New Zealand, Canada, and the US and revenues of $A500 million and Mr Hill said he's always wanted to build a global, family dynasty. Hill family associates control 53% of the listed company.
Mr Hill will be the only person capable of being appointed to the founder president office.
One shareholder questioned Emma Hill's appointment, saying chairmen of publicly listed companies are required to be independent directors by some stock exchanges, including the ASX.
Michael Hill shed a few tears while defending his daughter's appointment. "It's important to keep the company going as a family business so it's not just a clinical, big business without romance and soul," he said.
Independent director Rob Fyfe said the board had considered the pros and cons of Ms Hill taking on the chairmanship and concluded there was enormous competitive value in having a family-led brand.
"This was strongly supported by the independent directors. Effectively the independent directors on the board wanted continuity of that family founder profile which is a powerful asset compared to companies that do not have that."
Chief executive Mike Parsell also stood down from the board without seeking re-election following a board review of company governance though he'll continue running the company.
The board review determined, with Mr Parsell's support, that the chief executive also being on the board created a potential conflict and ambiguity as to the distinct roles of governance and management. The board's governance role includes reviewing the strategic direction, operating performance, and risk profile of the business as put forward by the chief executive and management team.
"If the chief executive is also a director, there is an implicit element of self-review which the board has concluded should be avoided," Ms Hill told shareholders.
She said the company still had ambition to grow to become a global brand with 1000 plus stores worldwide. She has worked for the company for 30 years, starting as a part-time professional on the Whangarei shop floor at the age of 13.
Emma Hill established Michael Hill Canada in 2002, and that operation has now reached 65 stores. Parsell said Michael Hill's expansion in Australia, which is continuing, had showed that the economies of scale kick in when the business hits 80 stores in one market and it was close to achieving that in Canada.
The company sees potential for 110 stores in Canada, with plans to open 10 a year until it hits that target.
Although Michael Hill is still making a loss in the US where it has 10 stores after seven years in that market, the company plans to lift that number to 19 by the 2018 financial year. Emma Hill said they were learning a lot of lessons in the competitive US jewellery market that was standing the rest of the company in good stead, particularly around "truly being a brand and in a more competitive marketplace you have to differentiate."
The company's strategy is to continue its expansion in North America and Australia and of the complementary Emma & Roe brand, while developing proprietary branded jewellery such as the Michael Hill Designer Bridal collection themed around the founder's love of music, which are proving popular in the US market, now accounting for nearly a third of sales.
The company's shares rose 2.1% to $2.96.