Following a successful engagement led by ShareSoc (Tim Grattan and Cliff Weight led this Campaign) we agreed a compromise with the Directors and agreed to support the new proposals.
The annual report has now been published and contains the following description of the way the Board engaged following the 2019 AGM.
New management performance incentive
At the General Meeting held on 21 August 2019, an ordinary resolution was proposed to approve the changes to the Company’s Management Agreement, as detailed in the circular sent to shareholders on 1 July 2019. Whilst the majority of shareholders supported the changes, with 70.4% of the votes cast in favour of the resolution, the Board noted that more than 20% of the shareholder votes were against the resolution.
This prompted the Board, in accordance with the UK Corporate Governance Code, to carry out a consultation process with those shareholders whose shareholdings represented a majority of the votes that voted against the resolution to more fully understand the reasons for their opposition. Of the total number of shares that voted against the resolution, 59% were contacted directly by me. Responses were received from a number of shareholders and the Board took time to carefully reflect on this feedback.
As announced on 6 February 2020, although there was no clear unanimous reason for the opposition to the proposed changes, the Board re-negotiated with the Manager to reduce their share of returns achieved in excess of the hurdle from 20% to 15% which will be deemed to have taken effect from 1 April 2019. All other terms, as detailed in the circular will remain the same.
The process the company followed was good and should be commended as should their explanation, even though it did not mention the role that ShareSoc played in the engagement. All credit for the directors for acknowledging the issues, although some people may argue that they were weak in the first place, asleep at the wheel, bullied by the manager, etc
Shareholders should make their own voting decisions, however you should know that I will be voting in favour of all the resolutions at the 2020 AGM.
For more information on this campaign see: https://www.sharesoc.org/campaigns/albion-vct-campaign/
Cliff Weight, Director, ShareSoc