from Adrian Costain, Londis Shareholders’ Action Group
Sir; I write to explain how the Londis Shareholders’ Action Group (LSAG) came to be. We hope this will help to ensure that in future the standards of corporate governance in the grocery sector remain beyond reproach.
As a relative newcomer to Londis, it first came to my attention in last year’s AGM papers that the executive directors of Londis had a highly unusual share option incentive scheme. I made it clear to Londis that the directors were leaving themselves exposed to the charge of abuse of power.
I advocated that the best way to deal with this issue might be an internal Londis/retailer communication programme to solicit opinions and reform as appropriate. My idea was ignored and the story was picked up with the announcement of the Musgrave deal.
The LSAG has since evolved in response to the threat environment. At its roots it comprises the finest examples of local entrepreneurship.
Much has been made of the argument that the share option scheme for the directors was legitimately voted through by 90% of shareholders. We hear that as few as 200 voted, little over 10% of the 1,900 eligible to.
The breakdown of corporate governance procedures at Londis allowed directors to hold five-year contracts and remain incumbent without rotation for more than a decade. This led almost inexorably to a sale agreement that lined the directors’ pockets at massive expense to the shareholders. It appears that the board of Londis stands to gain more than £30m from the sale of the company to Musgrave, yet its net worth is only about £20m.
LSAG is dedicated to obtaining a fair deal for Londis shareholders and to act in a way that strengthens the long-term prospects of independents in the convenience sector. We hope that by explaining ourselves readers will be minded to support our claim that the EGM should be postponed; and that Londis should fund the cost of any reasonable work we require to be undertaken to reassure shareholders they are committing to the best proposal possible. It is, after all, our company.
Sir; I write to explain how the Londis Shareholders’ Action Group (LSAG) came to be. We hope this will help to ensure that in future the standards of corporate governance in the grocery sector remain beyond reproach.
As a relative newcomer to Londis, it first came to my attention in last year’s AGM papers that the executive directors of Londis had a highly unusual share option incentive scheme. I made it clear to Londis that the directors were leaving themselves exposed to the charge of abuse of power.
I advocated that the best way to deal with this issue might be an internal Londis/retailer communication programme to solicit opinions and reform as appropriate. My idea was ignored and the story was picked up with the announcement of the Musgrave deal.
The LSAG has since evolved in response to the threat environment. At its roots it comprises the finest examples of local entrepreneurship.
Much has been made of the argument that the share option scheme for the directors was legitimately voted through by 90% of shareholders. We hear that as few as 200 voted, little over 10% of the 1,900 eligible to.
The breakdown of corporate governance procedures at Londis allowed directors to hold five-year contracts and remain incumbent without rotation for more than a decade. This led almost inexorably to a sale agreement that lined the directors’ pockets at massive expense to the shareholders. It appears that the board of Londis stands to gain more than £30m from the sale of the company to Musgrave, yet its net worth is only about £20m.
LSAG is dedicated to obtaining a fair deal for Londis shareholders and to act in a way that strengthens the long-term prospects of independents in the convenience sector. We hope that by explaining ourselves readers will be minded to support our claim that the EGM should be postponed; and that Londis should fund the cost of any reasonable work we require to be undertaken to reassure shareholders they are committing to the best proposal possible. It is, after all, our company.
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