Solomon Lew's Premier Investments has slammed Myer's new long-term incentive plan as rewarding executives for declining performances.
The department store chain's largest shareholder said the plan lowers performance hurdles at which share rights begin vesting.
Myer this week overhauled its performance targets and adjusted its 2017/18 long-term incentives plan (LTIP) for executives after unveiling another fall in quarterly sales.
The new plan targets a compound annual growth in earnings per share of 5.6 per cent.
Premier on Thursday said that would deliver an EPS of only 9.8 cents per share by the 2020 financial year.
"(Myer) is now actively targeting a 26 per cent decline in EPS by FY20 as a measure of success and a trigger for management's LTIP," Premier said in a statement.
"It also reinforces that the 'New Myer' strategy - that the board and chairman-designate have committed to - has failed and is now actively targeting performance declines."
Premier, the parent company of Smiggle, Peter Alexander and Dotti, reiterated its call for shareholders to vote against all directors seeking election at Myer's annual general meeting later this month.
Myer has dropped the sales targets it set as part of its much-vaunted turnaround strategy after unveiling another weak set of figures to investors.
Chief executive Richard Umbers said average sales growth above three per cent between 2016 and 2020 was no longer achievable because of stiff competition and weak consumer spending.
Mr Lew has rejected this explanation and said Myer does not know what consumers want.
