Pirc rears 100 Trojan horses to upset AGMs

Identical subsidiaries will launch assaults on firms by planting rebel resolutions at shareholder meetings
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The Independent Online

Pirc, the investor action group that last week tried to force the early resignation of the Marks & Spencer's chairman, has formed 100 subsidiaries to launch assaults on other quoted groups. Each vehicle will own a single share in the target groups, giving the necessary base to plant resolutions at annual shareholder meetings.

The phalanx of firms was first used in the attempt to force Sir Stuart Rose to quit as M&S chairman by next July, a year ahead of schedule. Some 41 per cent of shareholders backed Pirc's resolution or abstained, but M&S has written to the Department of Business to complain about changes that will make attacks easier.

The EU directive on shareholder rights, due to take effect next month, will reduce the period before an annual meeting when resolutions can be submitted from six weeks to 14 days and force the company to foot the bill.

M&S company secretary Graham Oakley has told Lord Mandelson's department: "It is possible to envisage a situation where a company is required to circulate several requisitioned resolutions as the fashion for using the process to gain free publicity grows." He says sending a rebel shareholder resolution after the annual report has been posted costs M&S £150,000. If a second item is added a further notice of meeting must be posted. "This would have resulted in three mailings to shareholders with an additional cost ... of about £300,000," says Mr Oakley.

He also warns that some investors will be disenfranchised if resolutions are dispatched too late to be voted on.

The companies formed by Pirc are called Corporate Governance Investors followed by the numbers one to 100. The group's managing director, Alan McDougall, and co-director Janice Hayward are the directors of all 100 subsidiaries.

So far, each company owns one share in M&S but a spokesman admitted: "This is not a one-off campaign. We can use this tool for other companies."

Resolutions must be backed by a minimum number of shareholders, typically 100, and holders of a certain proportion of the firm's shares. Forming the portfolio of identical companies enables Pirc to meet the minimum number, and it used the three million M&S shares held by Bradford Council to achieve the size qualification.

M&S has also complained to Sir Christopher Hogg, head of the Financial Reporting Council, about attempts to hijack annual meetings. Mr Oakley has told him: "Very often it is those with the least shareholding in a company that take the more extreme view."

Meanwhile, BT shareholders are being advised not to approve its remuneration report at Wednesday's annual meeting. Despite reporting a loss and cutting the dividend, chief executive Ian Livingston could receive an annual bonus of twice his £825,000 pay plus a share bonus of three times his pay.

Pirc says his targets are not sufficiently challenging and pay is potentially excessive. It has advised clients to abstain on approving the report and the Association of British Insurers has issued an amber alert to members to warn its members of the BT scheme.

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