The furniture and whitegoods retailer Harvey Norman announced the deeply discounted entitlement offer at its annual general meeting on Tuesday. It is priced at $2.50, compared with Monday's closing price of $3.71.

The underwritten pro-rata renounceable entitlement offer provides 1 new Harvey Norman share for every 22 held.

Directors will take up their full entitlement. Chairman and co-founder Gerry Harvey owns 29.5 per cent of Harvey Norman. Chief executive Kate Page is the ninth biggest shareholder, with 1.6 per cent, according to Bloomberg.

"The proceeds from the entitlement offer will assist Harvey Norman to achieve its capital management objectives," the company told the ASX.

"Specifically, the proceeds will be used to fund the payment of a special fully franked dividend to shareholders 14¢ a share, which is anticipated to be paid on 30 December."

Underwriters Patersons Securities will be paid $55,000 excluding GST. Mr Harvey will sub-underwrite the offer.

The announcement prompted a slip in Harvey Norman's shares and comes after the company announced that investors had sought a "clarification" of the CEO's pay packet after its annual report showed Ms Page's base pay had grown from $1.43 million to $2.07 million.

The retailer said given the size of its workforce, market capitalisation and earnings, "the fixed component of the remuneration of the CEO for the 2014 financial year would be $2.1 million".