Company directors have been warned against using the government's JobKeeper stimulus package to artificially inflate profit figures and pad up executive bonuses, with governance experts saying the practice could lead to shareholders being given misleading guidance.
However, with the likes of Harvey Norman and Accent Group, forecasting higher than expected profits despite having staff on JobKeeper, proxy advisory Ownership Matters' co-founder Dean Paatsch said companies need to come clean on the quantum of JobKeeper payments they receive."You would hope where the JobKeeper subsidy has been material to the company's result that will be called out explicitly in the forthcoming reporting season," he said.
Accent cited strong digital sales and the support of government programs as a reason for its increased profit, with the retailer's 5000-odd employees collecting the subsidies in recent months. "Investors are right to be sceptical where executives are drawing bonuses at the same time as claiming JobKeeper," he said."I don't think it was ever the intention of the government to subsidise executive salaries."
Despite the subsidy being a fillip for company earnings, analysts have said they will ignore profit figures for companies taking JobKeeper, with Citi's head of research Craig Woolford saying it was causing a "distorted picture" of company performance. "What we've seen from some companies in New Zealand is they've itemised the amount of wage subsidy that they received. I think that disclosure will help us understand the impact that JobKeeper has had on a business," he said.
Many retailers were doing poorly well before the coronavirus hit the retail market Case in point Myers David Jones