A fund advised by Shareholder Value Management AG (“SVM”), holding 8.93%
of Mears Group Plc’s (“the Company”) issued share capital, has
highlighted its disapproval of the Company’s board over its lack of
transparency after it rejected SVM’s proposal to allow shareholders to
vote on its next chairman.
Mears Group announced this morning that it has rejected SVM’s further
resolution to provide shareholders with the opportunity to vote on the
Company’s next chairman at its upcoming General Meeting (GM). SVM called
for a GM last week to request the removal of the Group’s chairman, Bob
Holt, and the appointment of a new, independent non-executive director
(NED), Andy Hogarth. Upon the appointment of Mr. Hogarth as a director,
SVM urged the board to appoint him chairman in a timely fashion.
However, Mears Group replied by saying board appointments should not “be
imposed on us by a single shareholder.” SVM therefore felt that it would
be in the best interests of the markets and the ultimate form of
shareholder democracy to put the appointment of Mr. Hogarth as chairman
to a shareholder vote, and thus requisitioned an additional resolution
to be added to the agenda stating:
1. THAT, conditional upon resolution 1 of the requisition dated 2 July
2018 being passed at the general meeting of the Company convened to
consider such resolution, that the board of directors of the Company be
and is hereby requested to appoint Mr Andy Hogarth as the chairman of
the board of directors of the Company.
Given that the resolution would have been non-binding, it is clear to
SVM that the Company fears the outcome of the vote which further
underlines the need for change.
SVM is evaluating further actions.
Gianluca Ferrari, Director at Shareholder Value Management AG, said:
“We are extremely disappointed by the Company’s stance. It is our
responsibility to call for better corporate governance at Mears in the
interest of increasing shareholder value. To dismiss our request to give
all shareholders a voice on the position of chairman and shielding their
actions behind procedural formalities while ignoring the elephants in
the room, for example the stagnating share price, lack of independence
at the helm and most importantly, poor capital allocation, proves our
point that swift change is necessary.”
“We are confident that our disappointment will also be shared by many
other shareholders who, like ourselves, expect a rapid turnaround in
Mears’ fortunes. Increasing shareholder participation can only work to
the Company’s advantage.”
Mr. Hogarth joined Staffline Plc as finance director in November 2004
and became CEO in 2009. Under his leadership, Staffline grew revenues
and profitability at a compounded annual rate of approximately 30%, with
annualized returns to shareholders in excess of 50%.
He has held senior roles in a wide range of businesses including retail,
support services, healthcare, hospitality and construction. He led the
MBO and subsequent trade sale in 2002 of Pipeline Constructors Group, a
£100m utility services business. Mr. Hogarth is entirely independent of
Shareholder Value Management AG is a Frankfurt based investment company
with EUR 3 billion in assets under management/advisory. SVM follows the
principles of "Value Investing" and adopts an active approach to the
management of its portfolio companies, frequently engaging in
constructive dialog and collaborating with them to contribute to
long-term value creation for shareholders.
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