Derek Pain: Now shareholders in small-caps are joining revolution

No Pain, No Gain

Shareholders are, at long last, banding together to give managements a much harder time. It seemed that the recent round of revolts was largely confined to the bigger elements of the stock market, such as insurance giant Aviva. But little-noticed events have shown that small-cap directors are not immune from shareholder anger with two former constituents of the no-pain, no-gain portfolio among those coming under fire.

Perhaps readers should not be too surprised at the difficulties that entrapped Goals Soccer Centres over the £73.1m takeover bid from the Ontario Teachers' Pension Fund. A few weeks ago I expressed surprise at the price the directors of the five-a-side football group had approved and recommended shareholders to accept. The Canadians offered 144p a share, a figure that looked absurdly inadequate when measured against previous levels.

Five years ago Goals shares topped 400p. In the intervening years the company prospered, although, perhaps, not quite so much as some anticipated. Even so, the shares were clearly worth more than the downbeat offer.

Indeed, the portfolio enjoys happy memories of the shares, selling at 300p, more than doubling its money. I dare say many existing shareholders were not prepared to consign history to their bank statements. Some could have paid more than 400p; many others considerably above 144p. Why, they asked, should they be expected to accept a stunning loss that is largely due to the disastrous lethargy that has embraced so many small-caps.

After all, Goals still played a rewarding game and had grown from around a dozen centres five years ago to 43 and also ventured overseas. The takeover, conducted through a scheme of arrangement, required a 75 per cent majority. In the event the bid collected support from 61 shareholders, amounting to 71.4 per cent of the voting capital. The 19 who voted against commanded the remaining votes and, therefore, blocked the deal.

With the Canadian pension fund, more or less, out of the takeover arena for six months, Goals shares have taken a kicking and, as I write, are 118.5p. Perhaps I should re-recruit them. After all the board is clearly receptive to bid action. Lighthouse, the accountancy and wealth management group, is the other ex-constituent to feel the weight of shareholder anger. The group's proposal to delist its shares from AIM was comfortably defeated. A meeting was requisitioned seeking the removal of David Hickey, chairman for 10 years. It seems rejection of the AIM withdrawal had already prompted Mr Hickey to depart at the time interim figures are announced, probably later this month. However, the call for his removal prompted him to bring forward his resignation. New chairman is Richard Last, a man who has featured in other past portfolio constituents.

Another example of shareholder pressure is Mouchel, the support services group that in happier days I considered for the portfolio. Shareholders were so disgusted by a rescue package, and, I suspect, the performance of management, that they turned down a scheme that would have given them a miserly one pence for each share they held. Although there is an element of self harm, their message was loud and clear; because of the circumstances surrounding Mouchel's plight they were prepared to ignore such a pittance. Mouchel subsequently opted for administration.

The so-called shareholders' spring has, as indicated, mainly focused on leading companies with voting against often excessive pay and perks gathering momentum. I would suggest some under-performing small caps should also be the subjects of such revolts. For too long shareholders have been prepared to meekly go along with controversial board proposals.

Now the rebellion has gathered such support that I suspect many a board is now prepared to scale back what could be regarded as unpopular proposals. Pay and perks have been the driving force for most complaints but shareholders, even among the small-caps, are prepared to resist what they consider moves that go against their interests. Perhaps, at last, the real owners of companies and not the employees are in the ascendancy.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent