Good morning, ladies and gentlemen. My name is David Gordon, and on behalf of the board, it's my pleasure, as Chairman, to welcome you to the 2024 Annual General Meeting of Accent Group Limited. I have to say, after having done this for some time, it's nice to see some familiar faces here, and we don't tend to operate our business with quite that sort of precision, but it's good to know that we've also got people online, and hence that's the reason for the synchronisation. I'm advised that a quorum is present, and I now declare the meeting open. I begin today by acknowledging the traditional custodians and owners of country throughout Australia and their connections to land, sea, and community. I pay my respects to their elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander peoples today.
For our New Zealand attendees, Tēnā iwi, tēnā mana, tēnā koutou katoa. As we have done previously, today we are holding a hybrid meeting where we can welcome shareholders in person as well as online via the Computershare platform. Those attending joining us virtually can hear a live webcast of the meeting. In addition, shareholders and proxies attending virtually also have the ability to ask questions and submit their votes via the online platform. Virtual attendees can submit questions at any time. To do so, please select the Q&A icon at the top of the screen, select the topic your question relates to from the drop-down list, and then type your question into the text box. Once finished, please press the send button.
Please note that while you can submit questions from now on, I will only address them at the time when the relevant item of business is discussed. Please also note that your questions may be moderated, or if we receive multiple questions on the same topic, amalgamated together. For those shareholders who wish to ask a question via telephone, please follow the instructions below the broadcast. For our shareholders attending in person today, those in possession of either an orange voting card or a blue non-voting card are welcome to ask questions, while those with a white visitor card are kindly requested to only observe during the meeting. If you believe you have not received the correct card, please go to the registration desk where a Computershare representative will assist you. I'll give all shareholders who wish to speak a reasonable opportunity to do so.
Please keep your questions to the matter at hand and as succinct as possible. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open the voting for the resolutions in items two to five. The resolution in item one carries no vote. For our shareholders attending virtually, if you are eligible to vote, once voting opens, select the vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There's no need to hit a submit or enter button as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen. You have the ability to change your vote up until the time I declare voting closed.
For those attending the meeting in person, if you are eligible to vote, you will have received an orange voting card at registration. If you believe you're entitled to vote and have not received the correct card, please go to the registration desk. To cast your vote, simply complete and sign the back of the card. A Computershare representative will collect your orange voting cards at the end of the meeting. Now I declare the meeting open and on the resolutions in items two to five. For our online shareholders, the voting options will soon be activated, so please submit your votes at any time. I'll give you time and a warning at the end of all items of business before I move to close the voting. Now that I've gone through all the formalities, let me get to the more interesting stuff.
Joining me here today is Daniel Agostinelli, our Group Chief Executive Officer, and our Non-Executive Directors, Michael Hapgood, Donna Player, Lawrence Myers, and Anne Loveridge. You may be aware that both Brett Blundy and his alternate, Tim Dodd, have resigned from the board. I wish to thank them both for their outstanding contribution to the board during a period of rapid growth at Accent Group. We have been the fortunate beneficiaries of their expertise and their dedication to the business. We're also joined today by our Chief Financial and Operating Officer and Joint Company Secretary, Matthew Durbin, and our Group General Counsel and Joint Company Secretary, Nikki Nuttall. The company's auditor, PricewaterhouseCoopers, is represented by partner, Alison Milner, today. A number of our executive leadership team and other Accent team members are also in the room as usual.
You will have seen that our General Counsel and Co-Company Secretary, Alethea Lee, resigned recently in order to pursue other opportunities. I want to thank Alethea for her contribution and wish her all the best with her future endeavors. At today's meeting, we'll be considering a number of matters set out in the notice of meeting dated 18 October 2024. Before we address the resolutions set out in that notice, I'll make some introductory remarks and provide an overview of our FY 2024 results and how we are continuing to create value for shareholders before passing over to Daniel to give his address. I'd like to begin by saying that in the context of a more challenging consumer environment, despite not delivering the results we had hoped for, Accent Group delivered total sales of AUD 1.61 billion in FY 2024, with a net profit after tax of AUD 59.5 million.
It was pleasing to note that the Accent Group was also able to capitalize on the strength of its brands and defensible market position to finish the year with positive sales momentum. Over the past financial year, the company has continued to expand its store network by adding another 93 stores, and its contactable customer base now sits above 10 million people. The company remains focused on growth and return on investment for shareholders. You will have heard me say that many times before, and it remains true today. With newer banners such as Nude Lucy, Stylerunner, Hoka, and UGG performing well alongside our continued growth in Skechers, The Athlete’s Foot, Hype DC, and others. The company continues to invest in key areas as it maintains a focus on its growth strategy.
The ongoing expansion of its store network, the development of digital capability, growing our distributed brands, and improving our vertical brands are all investments that have been targeted towards continuing the company's long-term growth trajectory. I take this opportunity to acknowledge and commend the entire Accent team for working with dedication, focus, and energy. They are the reason why we're here, and they are the lifeblood of the business. These achievements build and reinforce the company's strong and defendable market position, as well as increasing our relevance in target markets across Australia and New Zealand. The Accent business today is scalable, with future growth opportunities through online and new store growth, our large and diverse brand portfolio, and our new businesses.
Our business is flexible, with proven capability to leverage digital and online reach and to quickly respond to trends through our diversified portfolio of brands across footwear, accessories, and youth and lifestyle apparel. The market position of the business is also defensible. Our distribution relationships provide access to global product innovation with exclusive access to product. Our vertical-owned brands add to product differentiation and support underlying gross margin growth. Turning now to the results, our total owned sales for the FY 2024 year, which exclude the sales through franchisees of The Athlete's Foot, was AUD 1.43 billion, up 2.7% on the prior year. EBIT of AUD 110.4 million was down 20.5% on the prior year, with NPAT of AUD 59.5 million down 32.9% on the prior year. Gross margin percentage improved by 58 basis points to 55.8% was achieved.
Over the last 10 years, Accent Group has delivered a total shareholder return of 21.2% per annum compounding, outstripping that of the ASX 200 at 9.5% compounding. I'm very proud to be able to say that we have delivered long-term shareholder growth over the last 10 years of double that of the ASX 200, and this is something we aim to continue. The Accent Group's sustainability framework guides our commitment to ESG through three core pillars: our people, our responsibilities, and our environmental stewardship. At Accent Group, we prioritize our people because they are our greatest asset, and their dedication is the foundation of our success. In FY 2024, our team completed 600 safety audits at our stores. We also improved our reporting processes for team members. We are committed to providing a safe working environment, and as such, we have strengthened our internal safety training program.
Interestingly, you may not be aware that in more recent times, safety has not just meant the sort of safety we often think of in terms of ladders and the usual things, but interacting with customers who want to provoke or sexually harass our workers has become a real topic of interest and unfortunately is increasing, and so there are times when we have to tell our people that a customer is not always a customer in the sense that what they say always goes. We are committed to ensuring the safety at all levels of our people in store and outside store. For diversity and inclusion, we are proud to maintain a 65 to 35 female to male ratio across the group, and our board has also achieved its target of 30% female representation.
In our training function, we have launched the Accent Group Leadership Academy, engaging team members across all levels of leadership. We've also enrolled 475 team members in Accent Group University for those seeking qualifications in retail. Our responsibilities pillar centers on integrity and ethical practices. We are dedicated to supporting the communities we serve and protecting the information we manage. In ethical sourcing and modern slavery, we've updated our policies and utilized our supply chain portal for supplier and factory audit data.
We have continued our excellent community relationship with Headspace in Australia and Youthline in New Zealand, along with various local initiatives led by our brands. With data security top of mind, we have enhanced our anti-phishing measures and improved our critical incident response programs. Our environment pillar is a priority, and we're committed to initiatives that minimize our impact on the planet.
Through the Tread Lightly recycling program with the Australian Sporting Goods Association, we have 286 customer collection points in our stores, and we've successfully collected over 51,000 pairs of shoes for recycling. For those with children and grandchildren in playgrounds throughout the country where you find that spongy material for where they play, that's more often than not made out of recycled shoes. So every time you hand in a pair of shoes, you're doing something for the planet and for our children.
We have introduced the Alpha Dux school shoe made from recycled leather, and many of our global distribution brands also ensure that sustainable practices and materials are being used across their ranges. Finally, we've calculated our Scope 1 and Scope 2 emissions and are preparing to meet the new carbon reporting standards by FY 2026. We also remain the APCO member for packaging compliance. Together, we're working towards a more sustainable future. I'll now hand over to Daniel, our Group Chief Executive Officer, to tell you more about our achievements in FY 2024 and our plans for the future.
Thank you, David, and good morning, everyone. If I continue to slide 14 in operational highlights, total group sales, including The Athlete's Foot franchisees, are now over AUD 1.6 billion. In FY 2024, we opened 93 new stores across all formats in Australia and New Zealand to increase our total number of retail and online stores to 895 stores. Nude Lucy was the recipient of several new stores, with 36 new stores now open, representing a fast-growing world-class lifestyle apparel brand. Platypus and Skechers continue to grow and have 49 new stores open just between these two banners. Our contactable customer database has grown by 400,000 people to 10.2 million customers, something we're very proud of.
Pleasingly, our vertical brands and product sales are now in excess of AUD 125 million, which represents about 9% of our sales. Turning to slide 15, retail wholesale in our vertical-owned brands. As mentioned during the year, we opened 93 new stores across all formats. We made the decision to exit 17 underperforming stores relating to the Glue Store business. We also sold the Trybe business, and the CAT distribution agreement will no longer continue beyond its expiry date at the end of December 2024. We saw strong retail performance across Skechers, Hype, The Athlete's Foot, Stylerunner, and Nude Lucy. Wholesale sales were down 16.9% in FY 2024. Sales of vertical-owned brands and products continued to double-digit growth, with sales over AUD 125 million, representing around 9% of our own total sales. Total owned sales, I should say. Slide 16, loyalty.
As mentioned throughout FY 2024, we grew our contactable customer database by 400,000 customers to 10.2 million customers, which was a result of a strong drive to invite customers to provide email details in store. In November of 2023, the company also launched an exclusive loyalty partnership with Qantas, where customers can earn and spend Qantas points across the overall Accent business. To date, we are seeing new customers and high average spend on the Qantas-linked transactions. For FY 2025, we will be focusing on continued rollout of new stores, improving the underlying gross margin from our moat brands being our distributed and vertically owned brands, growth in Nude Lucy, operational improvement in the Glue Store, and Stylerunner, profit growth from The Athlete's Foot, and continued growth in digital sales.
I hope this gives our shareholders a clear idea of the activity and growth the company has planned in the up-and-coming future. We continue to build a defensible business in Australia and New Zealand. Our portfolio of global distributed brands, owned vertical brands, integrated digital capability, and large store network are core assets of the group and position us as a company well for the growth into the future. I look forward to working with our team and continue to look to deliver strong results. I will now hand you back to David. Thanks, David.
Thanks, Daniel. Along with our AGM presentation, we released a trading update to the ASX this morning. For the first 20 weeks of FY 2025, based on trade to date, total group-owned sales year-to-date are up 6.8% compared to the prior year, with like-for-like sales up 3.5%. FY 2025 gross margin percentage is down 0.7% for the comparable period last year.
The continued focus on cost of doing business efficiency is starting to gain traction, with cost of doing business percentage to sales improvement to last year, inclusive of the impact of restructured costs for the support team. Our store opening program is on track, with around 40 new stores expected to open in the first half of FY 2025. And finally, our in-stock position, along with sales and operational plans, are well set heading into the largest trading months of the year. You will also see that we have announced today that following the Frasers Group shareholding acquisition in August of this year, the company intends to appoint Dave Forsey, a former CEO of Sports Direct and current Frasers Group general manager of apparel, to the Accent board effective from the conclusion of the AGM today. We welcome Dave to the board and look forward to working with him.
Ladies and gentlemen, that concludes the business update, and we'll now progress to the formal business of the meeting. As I mentioned at the start of the meeting, voting is being conducted today by way of a poll, and voting is currently open for the resolutions in items two to five. At the end of the discussion of these items of business, I'll give you a warning before I close the voting. The first item of business is to receive and consider the financial report, the director's report, and the independent auditor's report for the year ending 30 June 2024. These documents are contained in the 2024 annual report, which was sent to shareholders on 18 October.
There's no formal resolution required for this item, but I invite any questions you may have about the financial statements or about any aspects of the company or the business generally. This is the time for any general questions, as I will restrict questions about the specific resolutions to matters pertaining to those resolutions. I'll take questions from the floor as well as through the Computershare virtual platform and telephone. I'll take questions from the floor before moving to the questions from shareholders attending virtually.
For shareholders holding an orange or blue voting card attending in person, if you wish to ask a question, please raise your hand. Once you're acknowledged, a microphone attendant will pass the microphone to you. Please state your name clearly and show your shareholder registration card. Now, are there any questions or comments on the financial report or the reports of the directors and auditors or any aspect of the business generally? Right.
Yeah, great. Lawson, I'm also a member of Teaminvest.
Welcome, Ray. Nice to see you again.
Thanks. Just a couple of things about sales prices. The results call talked about promotional activity. I wondered how that fits with the previously often mentioned position of no lazy discounting. And also following on from that, the same call referred to no price rises since last July. I assume that's 2023. Does that imply that Accent doesn't really have any pricing power even with its sole distribution products? And what about the vertically integrated ones? Is there pricing power there?
Well, I'll let Daniel speak to the lazy retailing reference, but let me just talk a little bit about the pricing power issue. At the end of the day, markets set prices, consumers set prices based on demand, and we respond to that demand. And there's a balance between price and volume, and margins are part of that mix. We have relationships with a number of businesses for whom we distribute the product, as you know. And in those situations, we can set the recommended retail price that applies in our stores and in other stores.
But as I said, consumers ultimately determine what a price is going to be. We have a competitive market, a highly competitive market in our country. And so we respond to consumer positions. And it will come as no surprise that at the moment, consumers are somewhat challenged. It's written in the papers every day. Life is tough at the moment, and that has an impact everywhere, not just in supermarkets. And so we respond to that.
That means that in a targeted way, we're constantly looking at how we can maximize our opportunity for gross margin by reflecting that in how we might put promotions through the business on certain products to enhance the sales volume and therefore result in a higher gross profit dollar position for the business. We've run the business like that ever since I can remember, in good times and in hard times. We reflect that. We reflect the hard times in our business where they're competing with the rest of the market. But I might let Daniel speak to the last year's retail results.
Oh, I think you've articulated exactly my thoughts too. The market has been challenging for all retailers and for every sector. We have some competitors that have been on sale for the best part of, in one case, 16 weeks, a fairly big competitor. We have to respond effectively in order to hold share or customers will go somewhere else. So we still stand by no lazy retailing. In the main, our core products are not discounted. It's mainly products where we feel we need to simply compete. And that's as much as I could really answer on that question. And, Ray, I wouldn't infer from any of that that we consider ourselves in any way weak in the market. We're a very strong competitor, and we have been for a long time, and we will remain that way. Thank you.
Are there any other questions from the floor? Please. We've got one in the back there.
Good morning. My name's Ken. Actually, I'm Teaminvest as well.
Oh, great. Nice to meet you.
Hi, guys. Question. We talk a lot about store openings.
Yes.
But I'm curious, if you stripped out the new store openings, what would have happened to the revenue on a like-for-like basis? Would you have gone sideways, backwards? And that's one question. The second question is, due to the size of the market, are you finding that you're getting rental discounts, or are you using your position to negotiate in a different way?
Okay, I'll deal with each of those questions. So first of all, our like-for-like sales only apply to stores that have been in existence for more than a year. And so when we indicate those numbers, that excludes the first 12 months of new stores. So we're only comparing how a store performs now to how it performed 12 months ago. And so it excludes the risk, as you mentioned, of simply adding the sales that come from new stores that aren't reflected in previous years.
So when we quote a like-for-like figure of 3.5%, that means that the stores that were here 12 months ago are up on average 3.5% compared to that position last year. It doesn't take into account the stores that we've opened in the last 12 months. They become relevant in next year's result. So we cater for it that way. The other question you asked was about rates. And again, we now have over 900 stores. Daniel, can you tell me the exact number? 885. 885. 885. There you go. I'm wrong. 885 plus online? What that includes? Includes. Okay. 885 stores, making us a substantial player in the market. We have in many malls multiple outlets, as you would know, and in some, that extends to seven, eight, or nine locations. And so we have a strong negotiating position with landlords, and we use that to best effect.
In some cases, that means that where landlords aren't prepared to offer us what we consider to be commercially attractive rents, we have to close stores. And we have, and we will continue to do that where appropriate. And so we use our position in the market, in a competitive market, but in the market, to achieve the best outcome that we can for the company on a store-by-store basis. It also means that we often have the opportunity, if we're launching a new banner, for instance, to approach landlords and seek to get a deal for a number of stores that may be either in the same mall or across a number of malls. And so in that way, we can also often engineer a better outcome for the company. Thank you.
Great. Thanks.
Yes, sir. Yes, Jeff. Hey, Jeff. Welcome.
I've got two questions. First is, with the scaling down of the
Glue Store.
Glue Store. Thank you. And the getting out of Trybe. Yes. What do we think about, in five years' time, the profit contribution from apparel?
What an interesting question that is. So we embarked on a strategy of expanding the scope of the business beyond purely footwear into apparel some time ago. And it's not often thought of, but the single greatest piece of apparel that we have now sold for a long time is socks. And that has become a very powerful program in our stores. Daniel, you happen to know off the top of your head the number of socks that we retail?
I think it's up around AUD 60 million or thereabouts. Right.
Fortunately, socks wear out, and new ones are purchased, and we've got a great program in providing that. And so that's the early stage of our apparel growth. But you're referring to the apparel that we're selling in places like Nude Lucy, in Stylerunner, and in the Glue Store. At the moment, our apparel sales are, Matt, help me, what percentage of total?
They're about 10% of total.
10. And we aim to increase that over time. And we have a number of strategies that are developing to do that, that include the banners that you're aware of already and some new ones that we have in mind. Now, apparel is a different business to footwear, and so we tend to do things incrementally. We try, we learn. Sometimes we make a mistake. We quickly rectify our mistake, and then we learn from it, and we move on to the next one. And we've done that over a long period of time.
It doesn't mean we won't make mistakes in the future. I guarantee to you that we will, but we'll learn fast from them, and then we improve, and we've done that with our apparel program in the existing stores that we have, the socks that I mentioned, and in the broader base of apparel that we have across those apparel stores. You're going to ask me to forecast a number for apparel in five years' time. I have no idea. I can tell you our aspiration is for it to grow substantially. As a percentage of the business. As a percentage of the business.
Okay. That second question was, I know we've got the British guy here, but how should we feel about the Frasers Group? Should it be optimism, excitement, fear?
Right, well, the British guy, as you mentioned, Dave Forsey, is actually at the back of the room. And we've spent a considerable amount of time with Dave and with some of his colleagues, both here and in the U.K., over the last few months. And we are absolutely delighted that they've taken on their shareholding in the business. And I can say to you that we continue to discuss the ways in which we can expand our business in Australia and New Zealand in partnership with the Frasers Group. And it will be an open secret that for those that don't know, the significant business, the most significant and relevant business in their constellation is the Sports Direct business, which is a very large global sporting retailer. And all I can say there is, stay tuned. Thank you. Are there any other questions from the floor? I really like questions. Oh, yeah, please.
I was going to say there were just general discussions afterwards. It seemed to be pleading for questions. Yeah, well, regarding brand relationships, there's a challenge of brand On, which is a bit of a weird name. That was referred to in the results call. I previously read in the AFR that they were selling direct to the public. So what's the relationship? What's the distribution arrangement, if any, with On?
Daniel, do you want to address it? On? On.
Well, On is distributed here by a subsidiary that's owned by the On Group. It's a very fast-growing brand of the world, not only in trend, but also in technology. We happen to be the recipient of a lot of their work in three or four of our banners, so much so that we're the largest seller of that product in the country. And we are about to go into, I think it's 50 Platypus stores as well.
So we enjoy good margin without having to distribute it. But we're very excited about what that brand's doing. In our current business of Hype and Stylerunner, it's very strong. So the runway is looking good for that brand for us. Thank you.
Great. If there are no more questions from the floor, I will see if there are any questions online. Nikki, do you have any questions?
Yes, David, did we have a number of questions? Okay. All right. The first one is from Peter Richardson. The question relates to, are you seeing any increased pressure on rents in this post-COVID era? Are there any significant rental increases expected?
I can answer that question. In the A-grade shopping centers, where the traffic seems to be back or coming back strongly, there is some pressure on renewals. But given the might of the group, as David mentioned earlier, we're able to somewhat negotiate those terms. Dave Coombes, our group property manager, is in the room with his team, and they're doing a great job ensuring that we don't pay over the market range. In terms of the B and the C-grade shopping centers, if you can call them that, we're still enjoying good renewals, seeing them either maintain or indeed reduce in terms of the overall rental payable. And we're still enjoying some contributions from landlords in almost every new store. In fact, I have to say 99% of new stores won't open without a contribution. The power of the group, or the might of the group, is such that a new shopping center, as an example, opened in Manawa Bay in New Zealand.
We put, I think, seven banners into that center on the opening day of that shopping center, and all stores in our view achieved the best rents in market with the best contributions. Thanks.
All right, Nikki, next one.
Next question is from Stephen Sherman. He asked, how many stores do Accent think the Australia-New Zealand market has the potential to support?
That's a very interesting question, Stephen. I'd say lots. Look, the fact is that we run a number of different retail banners, as you're all aware. At each one of those banners, those businesses have a different capacity for stores. Importantly, we mustn't forget that in addition to the number of stores we have, we also have a very significant online business. We run an excess of 40 different online businesses across Australia and New Zealand, and they are increasingly generating sales for the business.
It's a conscious strategy that we started, oh, I'm going to say, 10 years ago now, and so I don't think it's possible for me to say the total number of stores because we're always looking for new opportunities and new ways in which we can provide great customer experiences and deliver great products to our customers, so we will continue to do that. Thank you.
The next question is from Stephen Mayne. Could the chair please comment on how much he and the CEO were involved in negotiations between Brett Blundy and Frasers? Did it involve the promise of a board seat for Frasers? And are there any formal agreements between any of the parties besides the straight 165 million share sale? For instance, is Frasers completely free to launch a hostile takeover bid or keep creeping up the register without providing any prior notification to Accent? What, if any, conditions have been placed on Frasers in return for granting them the privileged position of a seat on the board?
Okay. There's a lot of questions there, Stephen. But welcome. I always enjoy your questions. I think the way to sum up my answer to all of your questions is that there are no agreements in place with the Frasers Group at this time, and that the acquisition of shares by the Frasers Group was a decision that they took, obviously, as an acquirer. And I welcomed the opportunity for them to bring their global expertise to our board in the form of a director. It's going to be Dave Forsey. We are under obligations, and we obviously intend to continue to provide information to shareholders to ensure that there's an orderly market in our securities. That involves ensuring that whenever there's something important to tell people, we tell you. And I can assure you that when there is, we do. And when there is, we will. And so I really can't say much more than that. Thanks.
The next one is also from Stephen Mayne and on a similar question but slightly different. Given that Brett Blundy tipped the deal to sell his 14.6% of our company in August for AUD 165 million or AUD 2 a share, why didn't we put Frasers' nominee, Dave Forsey, up for election at today's AGM rather than announcing his appointment 56 minutes before the start of the AGM and making it effective from the moment the meeting finishes? Why couldn't he have become a director at 10:00 A.M. this morning and fully participate in the AGM this week?
The answer to that question is that we are in discussions with the Frasers Group, and we have had substantial discussions with Dave about our business and about the growth of our business. We're in this unfortunate situation where, as Stephen will know, if we appoint a director before an AGM, our requirement is for that director to come up for re-election at the next AGM. We'd already sent out a notice of meeting some time ago. So I can only suggest that any directors who get appointed will come up for reappointment or re-election at the next AGM, which is exactly what we'll have today. There is nothing more to the story than that.
The next question is from Stephen Sherman again. What are digital sales for FY 2024?
Stephen, great question. I'm going to hand that straight to Matt.
Thanks, David. We actually haven't talked about our digital sales for FY 2024. We used to split them out, and we now see ourselves as a fully omnichannel integrated retailer. We have said that digital sales remain strong and continue to grow, and it very much remains a strategic focus for us to grow those. But ultimately, they're integrated with what we do with stores going forward.
Exactly. So just to give a bit more background on that, we've been operating our omnichannel model now for, as I mentioned, I think it's at least 10 years or thereabouts. And in the early days, the sales that we got online, they were exceptional. They were different, and we called them out. But as time goes on, they are just sales like all of our other sales.
It would be the same as anyone suggesting to tell you the number of sales made in a particular store by right-handed men who came into the store and those that are by children under the age of 10. So what we do is we focus on providing products and services to the market as broadly as possible, both in store and online, as combined on the omnichannel model. We are delighted that that continues to grow, and it remains an area of strategic focus from the business, and we'll continue to. Thanks for the question, Stephen.
One final question, David, from Peter Richardson. Can you please provide an update on the project you announced last year to not renew 62 Athlete's Foot franchise agreements and acquire those stores from franchisees? How many stores have you acquired to date, and are these counted as new stores in your reporting?
Matt, I'll let you handle it.
Thanks, David. So for today, there's an answer, and we don't put them as new stores because, indeed, we count the franchise stores in our total store numbers today. So they're not considered new stores.
Right. And just to put a bit more color on that, the franchise arrangements that we have for The Athlete's Foot could apply over five-year periods. What we've announced is that we won't be renewing or entering into new franchise agreements. And so over the next four and a bit years, those franchise arrangements will conclude and result in either us acquiring the stores or those stores will close.
We have had extensive discussions with franchisees about that, both in the past and since the announcement, and we continue to see a strategic focus for the business in the corporatizing of the Athlete's Foot model. We now have. Matt, just remind me, how many stores are corporate-owned and how many are franchise?
There's about 86 corporate-owned, and that leaves about 58 franchise.
Great. Thank you. All right.
Sorry, Dave. There is one follow-up question from Stephen Sherman in regards to the online. So how can we evaluate the performance of online?
You can evaluate the performance of online the same way that you evaluate the performance of all of our stores, which is based on our like-for-like sales performance, the growth in the number of stores that we have, and ultimately, the growth in our sales and profitability. That's it?
Yep. Great. Awesome.
Thank you all very much. Now that we've concluded those questions, in respect of the remaining items of business, I'll put the resolution to the meeting, then invite discussion and inform the meeting of the proxies received. Item two relates to the remuneration report and the adoption of that report. I note that in accordance with the Corporations Act, the vote on this resolution is advisory only, and the outcome will not be binding on the board. The FY 2024 remuneration report outlines the group's remuneration strategy and framework and decisions taken by the board in relation to the remuneration of key management personnel. This report sets out how the board has approached remuneration in the context of the significant business growth achieved over the last five years and the financial results achieved in FY 2024.
Accent Group continues to invest in the strategic priorities of the business, both for future growth and to continue our journey as a regional leader in the retailing and distribution of performance and lifestyle footwear and apparel. In the year characterized by a more challenging consumer environment and inflationary pressure, the company has remained focused on growth and return on investment for shareholders. The company's new banners, including Nude Lucy, Stylerunner, Hoka, and UGG, have performed well, along with a strong contribution from Skechers, The Athlete's Foot, and Hype DC. The management team's continued focus on improving the efficiencies and capabilities of its digital operations has also resulted in an increase in the profitability of digital sales. As I mentioned, Accent Group opened 93 new stores during the financial year.
Having regard to the results achieved in FY 2024 and that Accent Group has, over the past 10 years, delivered compounding total shareholder returns of more than 20% per annum, the board determined the following remuneration outcomes. 10.2% of the group's CEO and CFO's FY 2024 STI is payable as the financial hurdles for payment of 70% of the FY 2024 short-term incentive were not achieved, and only a partial number of the strategic measures were achieved. And there's nothing new in that. We are a highly performance-oriented organization. We look for growth, and that means that, essentially, our remuneration framework delivers results for the management team when it delivers results for shareholders. And we have had that closely aligned for a long time now, and we believe that to be a successful and winning formula.
Unfortunately, in the relatively few bad years I'm pleased to say that we have, that also means that the bonuses for management are similarly reduced, and last year was an example of that, as you would expect us to. In respect of tranche four of the performance rights plan, it was determined in FY 2023 that the required minimum 10% compounding growth per annum in adjusted earnings per share for the period of FY 2020 to 2023, being AUD 0.1397 per share or more, has been met, with the actual adjusted earnings per share for FY 2023 being AUD 0.1563 per share. As such, tranche four vested for those who met the time-based condition of being employed on the July 1st, 2024.
In respect of tranche five from FY 2021 to FY 2024 of the performance rights plan, the compounding growth per annum in adjusted earnings per share was not met, and as such, no performance rights will vest for tranche five and will expire. In relation to the company's long-term incentive program, the board still considers that a single metric program using earnings per share as the measure is the best approach for the delivery of a scheme that is easy for the Accent Group team to understand and thus creates real incentive during the year and that aligns management performance with shareholder value creation most closely. I must say we are a bit of an outlier, Matt, because the accepted wisdom is that we should run a more complex scheme that includes not only earnings per share growth but also a comparable sort of total shareholder return.
We have done that many years ago, and the simple answer is it didn't work. No one could understand it. We had to employ an expert at the end of the year to tell the board and everybody else what the total shareholder return metrics were, which simply meant that it didn't act as an incentive for the team during the year. And so we have somewhat religiously stuck to what works, and that is to have a simple scheme where we focus on growth in earnings per share. And that is the same growth in the same metric that drives shareholder value. And so we think that having something that is simple, that is easy for the management team to focus on, and I can assure you that they do, day after day, week after week, and month after month, everybody knows exactly what our EPS looks like.
The management team get it on their mobile phones on a daily and weekly basis. So it acts as an incentive. It may not be as popular with some proxy advisors or with others in the market, but it works for us, and it's worked successfully. All I can say is that if you look at the growth we've achieved over the last 10 years compared with the ASX average, we believe that it's a winning formula, at least for us. So we will continue with a single, simple long-term incentive scheme. In relation to that scheme, your board, your directors unanimously recommend that shareholders vote in favor of adopting the remuneration report for the financial year ended June 30, 2024 as set out in the annual report.
I now put the resolution to the meeting as an ordinary resolution, as shown on the screen, and open this item for discussion. I'll now invite anyone on the floor to ask any questions relating to the remuneration report and our remuneration practices generally. Are there any questions? Great. We'll get a microphone for you. Yep. If you could state your name first, that'd be great.
Yeah. Good morning, Mr. Chairman. My name's Chris Love. I'm representing the Australian Shareholders Association.
Welcome, Chris.
Thank you again. Great to be back.
I'm glad to see you.
Yes. And I also wanted to report some growth from our association because this year I'm representing 58 members and non-members with just over 1 million shares.
Excellent. So we look forward to that growing over time.
Like yourselves.
Yes.
In relation to the remuneration, one issue I'd just like to drill down a little bit more in relation to, and you mentioned it in your address today, is around safety. And the concern there is we note that you issued your sustainability paper that you released to the market earlier this year of an increase in the lost time injury rates that unfortunately has increased from 2.24 to 4.88. It's obviously a concern to you and the board and everyone generally. I might add, as I know people in my own group should have said, how great it is to come into your office and your setup once a year, see the vibrancy around the office, to see the young people involved, and see the growth. I also should add, our thanks and compliments to you that you hold a heart with me.
Some companies have moved away from that, but the ability to attend is fantastic. But for those with reasons often beyond their control, they can't make it, the fact that they can be here this morning, be involved in the meeting and hear you speak, hear your board speak, and then speak is a real plus, I think, for retail shareholders. Thank you. So thank you again for doing that. But getting back to the issue of safety, you also reported that you had a rise from 122 to 285 total recordable injuries this year, again, a concern. You've tried to explain this by saying, of course, that you've got a large body of stores, and that's acceptable and understandable. I'm not so sure about the fact that you said it's due to an implementation of a new digital reporting system.
Obviously, you made a mistake. But where I'm coming from in terms of the remuneration, as you know, your STI is 70% financial, 30% strategic in terms. When we look at the strategic objectives, none of them relate directly to safety. And just like your comments in remuneration matter, when you attempt to address that in recovery.
That's a really good question. So first of all, let me say or repeat what I said earlier, that our team is the most important asset that we have. I think I say that regularly at this event, and it's true. And their safety at all levels is of absolute priority to the board and to the business. At every board meeting, we address our people as a subject, and that specifically includes a report on what's going on with safety metrics.
It is the case that our workforce increases as our store numbers grow. It's also the case, by the way, that the average age of our team in store is about 22 years old. As the business becomes larger and more complex, that places a greater and greater burden and responsibility on us to train people in relation to all aspects of the business, including in particular safety. Now, in the footwear component of our business, which is the majority of it, that involves back rooms that have boxes stacked high on shelves and the use of ladders for people to access that product. Now, we're not alone in that. Most retailers have exactly the same issue. The incidence of ladder-related safety issues is always a concern. We focus on it. It goes down. It goes back up again. We have to focus on it.
It's a level of vigilance that we remain. And there are people in this room who spend lots of their time ensuring that our team members are adequately trained and appreciate the safety issues. But as I also mentioned, oh, and I should also address one thing. You said that there were two components that we made reference to, and you didn't necessarily agree with the second, which is that we've made it easier for people to tell us when they get hurt or if they've got an issue. And I should just say that I mentioned that the average age of our team in store is 22. The concept of an email is totally foreign to most of those people. And indeed, unfortunately, maybe sometimes the context of a conversation is foreign too. What they tend to focus on are their phones.
We have developed a totally online platform that enables people to tell us what's going on in relation to safety issues. That means that it's available to every single member 24/7 when they're as they carry their phone around. We do believe that that has meant that because we've made it easier for people to tell us, more people are telling us, which is a great thing. It means that initially, when you introduce a scheme like that, the numbers inflate. Now, I can't tell you the extent to which that inflation is due to the technology, but we do believe that to be the case. Having said that, any one safety issue is more than we should have. There is a vigilance on it.
And when you raise the question of strategic issues being factored into STI, I can assure you that while it may not appear in the text of the items, the KPIs that are relevant to the non-financial elements, it is absolutely taken into account by the board. And there is a regular focus by the board. It's every single meeting. By the management team, it's every single day on the safety. And by that, I mean not just physical safety, but the mental safety of our team. And I made reference to that earlier because of the unfortunate increase in abuse and harassment that our team members are getting from, unfortunately, from customers.
That's a difficult issue to deal with because when a customer walks in the door, the natural response of any team member is that they're a customer, that we're there to serve them and to ensure that they have a great experience. But when they cross the line, they're no longer a customer. That's a difficult thing to appreciate. It's difficult to understand where that line is. It's difficult, particularly for young people, to change their position. We rely on store managers. We rely on our area managers, on our executives to ensure that our team members are able to protect themselves. While the numbers are disturbing from the point of view of any one of them, it's a problem.
Fortunately, it's still relatively uncommon that it occurs, but we are absolutely focused on the safety of our team, mental safety, and the physical safety. And I'll take your comment on notice, and we will review it in relation to more explicitly stating the degree to which we focus on safety in the performance characteristics of our scheme.
Thank you. I think it's just a final comment. We're all indeed in agreement about the importance.
I know.
We can only take.
No, no, no. It's a great question. Thank you for the question. Are there any other questions on the remuneration report?
Thanks very much for your explanation of the reasons for 30%. As we know, the team is very much in favor of that. I'm not speaking on behalf of the group, but I would be very surprised if there was any member who disagreed with that. And just on the share rankings, which I don't know whether you've had the latest information that is anonymously aggregated through a database and passed on to us, there's about 53% of our members put their portfolios into that. And that total would rank us at number six, which is somewhere between 21.5 million and 31 million shares. So there's quite a bit of support from our group for what you're doing. Thank you.
Thank you. Are there any other questions on the remuneration report from the floor? Or on our remuneration processes or practices? No? Okay. Nikki, let's head to the online person.
I'll start with a comment from Albert Colman from Teaminvest . His comment is, "I and our 600-plus members are pleased to see that AX1 is still committed to EPS growth as the measure of LTI. Well done for not being sucked into TSR by any proxy advisors."
Thank you.
We then have a question from Peter Richardson. Can you explain what diluted EPS gets adjusted for in your long-term incentive to get the EPS?
Yeah. Sure. Matt, why don't you handle that one?
Yeah. I didn't actually get adjusted at all. We haven't actually made any adjustments at any point. Is it a simple answer? It is there because there is a discretionary element for the board, but that hasn't been exercised in the measurement. And in the tranches that are vested, in terms of the tranche four and tranche five, so the actual is equal to the adjusted. It's the right answer.
And let me just say, our policy is that our team should benefit when our shareholders benefit from increased shareholder value. And so we use earnings per share religiously as the measurement of that. But sometimes, and with apologies to Alison from PricewaterhouseCoopers, sometimes the accounting standards may affect what we consider to be the real benefit that's provided to shareholders. And so we provide ourselves with the flexibility. And I should also say, sometimes it might be that there's something that we haven't thought of that affects earnings per share that doesn't relate to the performance of the business.
We have not come across any such exception. And so the earnings per share that is used, or the adjusted earnings per share that is used in the long-term incentive scheme, is exactly the earnings per share. And if we ever do have an adjusted earnings per share that is different to our statutory earnings per share, we will not only tell you, but we'll tell you why. Thanks.
And then there's one question from Stephen Mayne. "Which of the proxy advisors produced a report on our company ahead of today's AGM? Were there any recommendations against this remuneration report item? And if so, what were the reasons? Also, please get with the program and disclose the proxy positions with the formal addresses ahead of next year's AGM to allow for a lawfully informed debate."
Okay. Well, everyone has their own definition of program, Stephen. But the answer to the question about the proxy advisors is, to my knowledge, all the major proxy advisors published reports, and every single one of them recommended in favor of a remuneration report, which I have to say I consider something of a great achievement for the business because it wasn't always the case that our approach to long-term incentive gained the support of all the proxy advisors.
So that's a bit of a win. Is that all we've got, Nikki?
Yes, it is.
Great. Thank you very much. Well, if there are no further questions from the floor or from the platform, I'll now move on to the next item of business. Item 3A is regarding the reelection of Ms. Donna Player. Let's say, sorry. Donna is considered an independent director in accordance with the ASX Corporate Governance Council's principles and recommendations. In accordance with the ASX Listing Rules and Accent Group's Constitution, Donna retires from this office at this meeting and, being eligible for reelection, offers herself for reelection as a non-executive director. I now invite Donna to address the shareholder.
Thank you, David. And thank you for your consideration of reelection to the Accent board. It's been my great privilege to work alongside the board and, in fact, the most excellent management team over the last six years to navigate the tricky waters of both retail, wholesale, and now our own vertical brands. I can confirm that I have both the capacity, in fact, the desire to contribute over the next three years. And again, thank you for your consideration.
Thank you, Donna. Your directors, Ms. Player and abstaining , unanimously recommend that shareholders vote in favor of reelecting Donna Player as a director of the company. I put the resolution to the meeting as an ordinary resolution, as shown on the screen, and open this item for discussion. I now invite shareholders on the floor to ask any questions regarding this item. Please. I have no questions at this point. Sure. Go ahead.
In addition to attending board meetings and reading board papers, of course, how else are you involved?
So I would describe myself as a passionate retailer with over 40 years' experience. And most weekends, I can be found in the stores looking at all of our brands. I would also say I hold a management position with Camilla Australia. I'm the merchandise director and design and product. And I understand this retail environment pretty well. So I would say I contribute on both the sort of. I have empathy for the management. I have great respect for the board, but I'm a retailer through and through.
Donna's been a retailer, I think. Yeah. Donna's been quite modest there. So she comes her career and her history are almost unparalleled in this market. And she's been involved in retail for a long time, and particularly in relation to merchandising and product. And so we are blessed to have her on the board because of the experience that she brings and the perspective that she brings. And one of the great benefits of having people from different perspectives around the board table is that we think about the issues from all of those perspectives.
And Donna is an expert, and also, I should add, a pleasure to work with. So it's a great question. And I can think of no one more active in relation to the operational side of our business around the board table than Donna, apart from perhaps Daniel, because that's yours. Are there any other questions from the floor? No? All right. Nikki, are there any questions from the platform?
No, no online questions.
Great. All right. Well, with 98.79% of votes in favor, I'll move on to the next item. The next item concerns the reelection of Miss Anne Loveridge, AM. Anne is considered an independent director in accordance with the ASX Corporate Governance principles and recommendations. In accordance with the ASX Listing Rules and Accent Group's Constitution, Anne retires from the office at this meeting and, being eligible for reelection, offers herself for reelection as a non-executive director. I now invite Anne to address the shareholders.
Thank you, David. I've been on the board since the beginning of the year, so for 12 months, and been chairing the Audit and Risk Committee during that time. I'm a qualified chartered accountant, and I previously have had 30 years working at PricewaterhouseCoopers, including as an audit partner. In the last 10 years, I have been a non-exec director of a number of listed companies, including NAB, NIB Health Funds, and Platinum Asset Management. So I have a good appreciation of finance, financial reporting, risk management, and governance. And I have the time and ability to work on this board. And in fact, I very much enjoy working in this sector. Thank you.
Thanks, Anne. Are there any questions from the floor in relation to this item? Yes. Go ahead. Yeah. Yes, go ahead.
Thank you. I'll just clarify. Are you still a current non-executive director of the National Australia Bank, NIB Holdings, Platinum Asset Management, and Diff Management?
I'm a current director at the moment. My term at the National Australia Bank finishes at the AGM in December this year because I will have completed three terms of three years with the National Australia Bank.
So that's about to finish. Could I have a secondary question? How can shareholders be sure you've got the time to put all the work beyond a 10-year board? Especially if there's a crisis with any one of those companies, you think you'd be able to manage that, given your own commitment?
Yeah. And I guess my record stands around my ability to always fully participate in all the meetings we've had over the past 12 months, despite having those current board other board appointments and activities happening at some of those other companies, including CEO succession at three of them, in fact. And so I have always found the ability to fully participate in all my boards. But as I know, I'll be finishing at NAB at the end of the year and probably obviously change my portfolio significantly.
Thank you for that clarification.
Thank you. Anne has also been modest. There's no harder-working director than Anne Loveridge. And in relation to matters of detail, when it comes to accounting and compliance, regulation, risk assessment, she's a standout. And again, we're very, very fortunate to have her on the board. But thank you for the question. Are there any other questions from the floor in relation to this item? If not, I'll ask if there are any questions from the platform.
Yes, there is. Stephen Mayne has asked, "Why was there a 19.6% vote against abstaining on the proxies? Which advisor recommended against, and which shareholders followed their advice? Corporate voting is not a secret ballot, and you should be across this detail."
Okay. Well, I don't ask any shareholder the reasons for their vote, and nor do I intend to in the future. The vote turns out as it is. Madam Rochester asked you in relation to the proxy reports, what the position was.
David, in fact, the proxy advisors don't send us their reports. Three of them require us to subscribe and pay money for them, and we're not allowed to do that. And so one of them sent it to us, and the one that we got voted in favor, which was up to you matters.
Thank you. All right. Are there any other questions from the platform? No, no other questions. That's great. Well, as there are no further questions from the platform and from the floor, I'll move on to the next item of business, which concerns the reelection of Mr. Lawrence Myers. Lawrence is considered an independent director in accordance with the ASX Corporate Governance Council's principles and recommendations.
In accordance with the ASX Listing Rules and Accent Group's Constitution, Lawrence retires from office at this meeting and, being eligible for reelection, offers himself for reelection as a non-executive director. I do apologize for having to go through all this verbiage every time, but unfortunately, it's required. I now invite Lawrence to address the shareholders.
Good morning, ladies and gentlemen. Thank you, David. I've been a director of Accent Group for about a year now. I'm also Chairman of the Performance and Remuneration Committee, which we call PARCO. I have more than 25 years' experience in apparel, retail, consumer brands, funds management, and business advisory. I have both the time and capacity to devote to this board. I've enjoyed the last 12 months working with Daniel and his management team. I think this is one of the best retail teams in the country. And it demonstrates on how they execute on each and every day. And I look forward to being of service, having been elected again this morning.
Thank you all. Are there any questions from the floor in relation to this item?
Yes. Be consistent.
Please go ahead. Can't let you off.
We note, again, that you've just been recently appointed. Congratulations on the appointment as CEO of Consolidated Press Holdings. This seems to be a pretty full-time job. We're just obviously wanting to understand how that impacts everybody. For the purposes of the record, would you like to comment?
Yeah, absolutely. Consolidated Press Holdings is the family office for James Packer. And although in years gone by, CPH has been a significant entity with significant operating businesses, there has been an agenda over a 15-year period to exit out of all of those operating businesses, the last of which was the sale by the Group of its shares in Crown Limited to Blackstone. Following that sale, there are no operating businesses within the CPH stable. And it is a passive investment office. My role there is quite specifically a part-time role, along with other part-time roles that I have. And I don't feel that it requires a great deal of my time. In fact, it probably takes less of my time at this point than I would spend on my board engagements. So I'm very comfortable that I have the time to devote to the Accent Group.
Thanks for clarification.
Let me add there that Lawrence is a highly experienced and very capable individual whom I've actually known for, I don't know, Lawrence, we'll give our age away, but more than 25 or 30 years, actually. About 30 years, yeah, exactly, and we're delighted and pleased that he's able to bring his expertise to our board table. So are there any questions, any other questions from the floor in relation to this item? If not, we'll go to the platform.
No, the question has already been asked, so that's fine.
Excellent. Great. Thank you very much. Well, there being no further questions, your directors, Mr. Myers, standing unanimously recommend that shareholders vote in favor of the reelection of Lawrence Myers as director of the company. I put the resolution to the meeting as an ordinary resolution, as shown on the screen, and hoping this item will have done that.
There being no further discussion, I'll now move on to the next item of business, which concerns variations to tranche 6 and tranche 7 of our performance rights scheme. The background to the company's performance rights plans, the various tranches, the proposed variations, and the reasons for the variations are set out in the notice of meeting. In summary, it's become clear to the board that the performance conditions for tranche 6 and tranche 7 were set at an unrealistic level. The board is concerned that the achievement of the tranche 6 and tranche 7 performance conditions is increasingly unlikely, and as such, those tranches are no longer meeting their objectives of acting as an incentive to performance and retention. For the reasons set out in the explanatory statement, the board is proposing to exercise its discretion to vary the performance attaching to tranches 6 and 7 as follows.
For tranche 6 performance rights, to reset the base off which the performance condition is to be assessed to the FY 2019 earnings per share of AUD 0.0954 and reduce the sliding scale annual compounding diluted earnings per share target growth to 8% as the threshold rate, 10% as the target rate, and 15% as the stretch rate, and similarly, for tranche 7 performance rights, to reset the base off which the performance condition is to be assessed to the FY 2019 earnings per share of AUD 0.0954 and reduce the sliding scale annual compounding diluted earnings per share growth to 8% as the threshold, 10% as target, and 15% as stretch.
While the board is conscious of aligning the performance conditions of tranche 6 and 7 performance rights to shareholder returns, the board considers that setting realistically challenging goals as opposed to those which would be likely unattainable will enhance the retention of those executives responsible for delivering outstanding return to shareholders. In this regard, the board believes that varying the performance conditions will serve as a powerful retention incentive. The board is seeking shareholder approval to exercise its discretion under the plan rules, as explained earlier in the notice of meeting.
Your directors, Mr. Agostinelli abstaining, unanimously recommend that shareholders vote in favor of the board's right to exercise certain discretions in relation to tranches 6 and 7 of the performance rights plan. I put the resolution for items 4A and 4B to the meeting as an ordinary resolution, as shown on the screen, and open this item for discussion.
Before I invite questions, I might just try and provide a simpler explanation to what we're doing here. For a long time, the company's long-term incentive plan operated off a base of requiring a 10% growth in earnings per share each and every year. And in fact, our first plan that was part of the series, our first tranche, simply said it was a 10% number. And we received some comments and suggestions from the market that having a single percentage meant that if the business failed to achieve that target by even the smallest number, it was a cliff that meant that either the payment would be made or it wouldn't be made. And that was a valid suggestion. So we amended our plan to provide, as is more common, that there was a range of outcomes in which performance would be rewarded.
And we stick and stuck to our target of 10% as the target earnings per share growth. But we suggested that if the earnings per share came in at 8%, then we would allow half of the payment to be made. That is, if 8% compounding return was achieved over the term of the tranche, then that would mean that the executives would receive half of what they would. Because we feel that if there's an 8% compound return for shareholders, that's kind of nice, but it's not entirely what we're here for. And so the remuneration that's received should be kind of nice, but not entirely what we're here for. And so we started with 8%. We also extended the upside to say that if the management team could outperform and achieve an earnings per share growth of 15% per annum, that we would provide 150% of the outcome.
So in the same way as the management team suffer a penalty, if you like, for performance that's below 10%, they should also have the opportunity to earn more if shareholders earn more. And while the difference between 10 and 15% might only sound like 5%, I can assure you when you compound it over a number of years, it scales up to a very significant number. And so it should. And so as shareholders are rewarded, so too should the management team. As we went through the bumpy period of COVID, our business experienced changes that most businesses did, which were exceptional in the sense that we'd not encountered that situation before. And as our earnings inflated with often our online sales and then when our stores were able to reopen our store sales, we delivered great results.
And so the board, with a performance focus, inched up the required target that the scheme needed to achieve in order for payments to be made. And as we did that in good faith and with discussion around the board table, we frankly made an error. And I said to you earlier that we don't always get it right. And this is a good example of where we did make a mistake. And we have identified that the current terms of those tranches will be almost impossible for the team to achieve. I can't remember the exact percentages that they got to, but it was that the initial rate moved from 8% to 10% and I think even up to 12% in the case of one tranche. One tranche was 14. 14. There you go.
So in keeping with our practice of identifying where we get things right and where we get things wrong and then learning from them, we go back to a first principle. What is the purpose of a long-term incentive scheme? It is to act as a retention and incentive of the people involved in our business who deliver results for shareholders. And if we've got terms of a scheme that aren't going to do that, then we believe the logical thing is to change those terms in light of the circumstances so that the scheme continues to do what it's intended, which is to retain and incentivize the management team. Now, in order to do that, we have to come to shareholders to say, "We made a mistake. We want to adjust the terms down." And what are we adjusting them to?
We're adjusting them to, surprise, surprise, the same thing that's worked for many years, which is an eight% threshold, a 10% target, and overperformance up to 15%. And our intention is to continue that for the scheme in future without variation. Now, I can't say that we'll always get it right by making that decision, but we believe that to be the simplest and most enduring way in which we can look to achieve long-term shareholder growth and incentivize and retain our management team. Now, it's not a popular thing for boards to, well, it's not common for them to say, "We got it wrong," but it's also not popular for them to then come back to shareholders in the middle of a tranche, so to speak, and say, "We want to change the rules." And we don't do this frequently.
In fact, I think this is the first time we've ever done it. And the reality is that we do it because we think it's in the best interests of the business, and we think it's in the best interests of shareholders. Now, there are a lot of people out there who think that once you've set the rules, you leave them like that as they are. We don't operate our business like that. Someone asked a question earlier about how we respond to the market and the idea of reducing prices where market conditions require. We are a dynamic business, and we do that at our retail locations, and we do that in all of our thinking. And as times change, we make decisions based on what we think is the best for the business. And we're doing that here in these two resolutions, 4A and 4B.
The bottom line is that we would like our long-term incentive scheme to return to the performance measures of an eight% threshold at which our management team will receive half their bonus, a 10% compounding return at which they will receive their full bonus. And if they achieve somewhere between 10% and 15%, then it scales up to about 250% of their bonus. And as you can imagine, that acts as a great incentive. It also means that there is a threshold in which shareholders know that unless there's at least eight% achieved, there's no payment. And at eight%, it cuts in at 50%, scales up to 100% by the time we get to a 10% compounding return. It's simple, and it works, and we'd like to go back to it. So having said that, let me ask if there are any questions from the floor regarding this item.
Cool. Just for that background and explanation, probably the first thing I notice is that there's a risk of being sent to the board. Not everyone agrees.
Yeah, you do. Absolutely.
I think the other point you didn't perhaps cover so much is that LTIs are meant to be at risk. There is no risk to them. There shouldn't be. Now, it's difficult for us as external shareholders to determine the business and what's achievable, what's not achievable. We're really in your hands in relation to that. But I think from a shareholder perspective, we don't want executives to take it as a given that we're going to get LTI. And as you already pointed out, the last tranche didn't vest.
But I think also I'd like to just clarify one of the things about coming to these meetings on a regular basis. I think two years ago, because of COVID, there was a variation made. It might not be exactly what we're doing today, but nevertheless, there was a variation made on the basis of COVID that allowed the executives to receive their bonus or estimate their bonus.
Yeah. So let me be clear on what I did. We did not vary the target and the threshold. What we said was that we could not accurately predict a once-in-200-year pandemic. And the impact of that pandemic meant that the earnings of the executives were subject to considerable variation. And we felt that what was appropriate was to give the management team an additional 12 months to achieve the returns for shareholders. We didn't change the number.
All we did was extend. You're right to point it out. So let me address it. All we did is extend by 12 months the time it would take for the vesting to be determined. And it still meant that the compound rate had to be achieved over the additional period, but it also meant that we could smooth out the effects of COVID as a means of trying to both retain and incentivize our management team. Challenge in my memory here that I recall half was basically awarded on the basis of half the achievement. Because halfway through the scheme, this is just prior to COVID, the returns were achieved. And so we felt it was appropriate to say, "You're right." It was appropriate to say that times were uncertain. Other businesses were losing management because of that. We didn't want to see our team affected.
I'm not saying it necessarily would have been, but what we did is we said, "At the halfway point, we tested and we gave half the rights because the number was exceeded." Then during the COVID period, which applied from 2020 onwards, things became more unpredictable. So in relation to that half, we did the one-year extension that I mentioned. That's absolutely right. Anyway, whatever. That was the situation. Let's come back to this resolution.
Yeah. Exactly. Nevertheless, we're basically in your hands in terms of the board obviously taking the view that things are not achievable. The point we're making is that they are meant to be at risk.
Okay. Let me say two things there. First of all, I violently agree with you that incentive schemes should not be considered guaranteed. They're not. And in our case, in relation to the long-term incentive scheme, the business still has to achieve an 8% compound growth rate. Now, I can ask all of you to think about your portfolios and which companies within your portfolios exceed that rate. Some do, some don't. We set that as the minimum. If it's less than 8%, there's no performance incentive paid.
And as I mentioned before, it goes up from there. We found that to be a formula that works well. And I can only say that on the basis of our history. We've delivered compound annual shareholder returns of well in excess of the ASX 200. Indeed, I think it's 20-point-something % over the last 10 years. Now, we think that's great. And we think it's great because it provides great returns for our shareholders, and many shareholders tell us that.
Having said that, I absolutely acknowledge your point that clearly not everyone agrees with us. And that's the reason why we come to shareholders and seek a vote. Because at the end of the day, you're the ones that own the business. So I'm actually very pleased that enough shareholders fell our way that we'll be able to make these changes because I genuinely believe that the change we're making is in the best interest of the business and therefore in the best interest of shareholders. And you're right to say that that's really a matter where you rely on us to make those decisions in the same way as you rely on us to make decisions in relation to every strategic element of the business. I think on balance, we've done pretty well over the last 10, 20 years.
And we don't always get it right, but we correct it when it isn't. And all I can say is that I'm genuinely looking forward to the next 10 and 20 years where we think, well, someone who won't be me, will be standing here commenting on the continued above-average performance of the business. And I think that our incentive scheme plays a large part in achieving that. But thanks for the question. Are there any other questions from the floor? No. Nikki, are there any questions from the platform?
Yes, sir. Stephen made up two questions, which I'm going to combine just for ease. Please. So first of all, he had a comment about the free proxy advisors not charging for the report on the last law discussed this. And then secondly, he had another comment. It's ridiculous to say that you would ever ask a shareholder why they voted against an item. It's called consultation. Don't confuse engagement with the concept of trying to persuade a shareholder who has voted against to change their vote when you see the proxies rolling. The questions are, there was a 43% vote against. Why was this? And Frasers voted in favor of the items by proxy, including on items 4A and 4B. Or is the incoming director, Dave Forsey, lurking in the back of the room with 300 million worth of votes in his hand? Hells bells, voting on all items? In which way are they voting? Surely they're not a 43% protest vote.
Well, first of all, I appreciate the lesson in corporate governance from Stephen. But I would say that we engage with our shareholders. I'm doing it right now . And we do it on many occasions. And there are many shareholders in this room that represent organizations that we engage with individually, as we do with large corporate shareholders and all the proxies as well. Our job is to present a case in good faith and then leave it to people to make their own decisions. And that's exactly what we do.
In this case, 56% of people are in favor of the resolution, and just over 43% are against it. And they've all passed on their basis. As for the voting intentions of any shareholder, I don't represent shareholders individually. I represent the company. And Stephen, if you've got questions for the shareholders, I suggest you ask any shareholder as to why they voted because that's a matter for them. Are there any other questions on the floor? Yes. Yeah.
I'd just like to say, I don't know who Stephen Mayne is, but I think the language he's using is bordering on insulting. And I'd like to say on behalf of the board, I've got nothing to do with you guys. But you talk about culture and safety. I think it's offensive language. I don't say to the chairman that it's ridiculous and things like that. So I'd ask Stephen Mayne to pull his head in.
Okay. Thank you. Yeah. Thank you. Nikki, are there any other questions? No, no further questions. Okay. Great. Well, there being no further questions, I'll move on to the next item. It's the last item of business, which concerns the grant of performance rights to Mr. Daniel Agostinelli. The background to the company's performance rights plans and the various tranches that have been made available to Daniel are set out in detail in the notice of meeting.
As we do every year and in line with the broader objectives of the company's remuneration framework outlined earlier in the meeting, the performance rights proposed provide a powerful incentive for Mr. Agostinelli to continue to drive long-term shareholder value creation and deliver the targeted performance outcomes set by the board. Tranche 8 is designed to be a continuation of the previous tranches that have been issued under the company's performance rights plan, with the objective of achieving a minimum 10% compounding diluted earnings per share growth over time. The EPS percentage growth for tranche 8 at target is set at 22.3%.
While on face value, this is higher than the 10% objective. It is reflective of the impact of challenging economic conditions in FY 2025 and the non-recurring impairment for Glue Store, which resulted in an artificially deflated base. The proposed growth of 22.3% at target reflects a continuation of the plan's objective of driving at least a 10% compound earnings per share growth over time by normalizing for the deflated 25 base year. Let me just explain. What that means is that if we set it off the most recent financial year number, it would frankly be easier to achieve.
We believe, and I think Daniel shares the view, that the business, its poor performance or its relatively poor performance in 25 compared to our usual growth rates means that we should look at what the long-term growth rate of the business has been and set the base as the earnings per share that we then compound at those 8%, 10%, and 15% levels at something that is more reflective of the long-term growth rates of the business. And so that's what we've done. And that's why it looks like it's a 22.3% growth. But what we've really said is it's an 8%, 10%, and 15% growth rate of an EPS number, which is higher than the EPS that we achieved in FY 2025. And again, we do that because we think it's in the best interest of the company and the shareholders.
Rather than religiously applying the terms of the scheme, which say we use the number that applied in FY 2025, sorry, in FY 2024, we're saying, well, it should be something that's more realistic and then achieve the sort of growth rates which we are aiming to achieve long term. Your directors, Mr. Agostinelli abstaining, unanimously recommend that shareholders vote in favor of granting 1,175,115 performance rights to Daniel. I put the resolution to the meeting as an ordinary resolution as shown on the screen and open this item for discussion. Are there any questions from the floor? Are there any questions from the platform?
Stephen Mayne has asked one, but it's kind of about the whole thing. So when disclosing the outcome of voting on resolutions today, including this final item on performance rights, could you please advise the ASX how many shareholders voted for and against each other? And similar to what happens with the scheme of arrangement, this will provide a better gauge of retail shareholder sentiment on our resolutions and insights into the chronically low retail shareholder participation rate. Others have already placed this trial, such as voluntary disclosure initiatives adopted by Qantas, ASX, Suncorp, and CAT, and even our own share provider, Computershare, during its current AGM season.
Thanks for the suggestion. We'll probably not take it, but we believe that we are reasonably good at providing information to shareholders, and we comply with our obligations. I think that it's ultimately up to shareholders as to whether or not they endorse and wish to back the directors that are on the board. We come up for election every three years, just as we've done this year and every other year.
And I'm pleased to say that we get resounding support in that regard. If the rules change, we'll certainly look at changing what we do, but we think that the course we're taking works well for us and for our company. So thank you for the question. Are there any other questions? No further questions. Fantastic. As there are no further questions, that will conclude all the items of business at today's meeting. I'll allow shareholders a few moments to complete their voting before I close the poll on resolutions two to five. This is the time when there's usually background music played at one of those competitions online. So I'm not going to sing for you. We'll just wait a few minutes and give people time to complete their voting forms. And the Computershare representatives are here to collect those forms.
Please make sure you sign the back of the form as well. And for those online, the voting is in accordance with the instructions that I gave at the beginning of the meeting. Are there any other forms? It looks like we've got one coming. Yeah, that's fine. Take your time, sir. I think that's everyone on the floor. I'm going to assume that that's given everyone on the platform the opportunity to vote. So I'll now declare voting closed on the resolutions in items two to five. That concludes the formal business for consideration at today's meeting. I declare the meeting closed. On behalf of the board and personally, I'd like to thank you for your attendance and for your ongoing support of Accent Group. The directors would like to invite those joining us in person to join us for a refreshment just outside. We look forward to another great year. Thank you very much for attending.