Filofax angers investors with pay increases

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Filofax directors faced the wrath of their shareholders yesterday when the company proposed a sharp increase in non-executive director fees and two new share-option schemes just two days after it issued a dramatic profits warning.

The company's shares collapsed by 40 per cent on the warning which claimed de-stocking by WH Smith and slower growth in the US and Japan would hit this years profits.

One shareholder said the proposals represented "rewards for failure". Another questioned whether it was appropriate to recommend increasing non-executive director's pay from pounds 20,000 to pounds 50,000 a year given the company's recent announcement. Though some shareholders voted against the schemes both were waived through.

The criticisms came at Filofax's annual meeting, which was attended by only a handful of shareholders in the basement of a Filofax shop in central London.

Ron Corbett, who sold his business to Filofax in return for shares instead of cash two years ago, said he was "shattered" by the profits warning. Another pondered whether the collapse in the company's share price might make the company vulnerable to a takeover.

Tom Drake, who is a non-executive of Filofax Limited, criticised one board member for selling almost pounds 2m of shares at 268p.

However, chief executive Robin Field said the director in question, the management consultant Richard Koch, had sold the shares in November, well ahead of the warning.

Some shareholders expressed dismay at the timing of the warning, which came just five weeks after an up-beat results statement.

"We all came here to congratulate you on last years results," one said. "One has to ask the question - are their any other factors behind the warning that have not yet been announced?"

Mr Field was also asked what words of comfort he could offer about the company's future. He replied that the market for ring binders was still rising and that Filofax remained the best-known brand. "In the short term we have some issues to address but in the long term we've got a sound business."

Mr Field was also asked if the company might conduct a share buy-back to increase shareholder value. Mr Field said the issue was under consideration but no decision had been taken.

He added that acquisitions were still possible though these would be smaller deals that could be done for cash rather than shares.

Last month the company said it was hoping to pick up some branded stationery businesses.