One of Britain’s most powerful fund managers has slammed Mitchells & Butlers MAB, -0.35% , one of the UK’s biggest pubs groups, for poor corporate governance and lack of boardroom diversity — reigniting a long-running shareholder conflict.
Aberdeen Standard Investments has taken the unusual step of publicly criticizing Mitchells & Butlers, which operates more than 1,800 pubs. It also revealed it voted against the re-election of chair Bob Ivell at the company’s general meeting, held in Birmingham on January 22.
The revolt by Aberdeen, which with its 8.7% stake is the largest independent investor, pitches it against billionaire investor Joe Lewis, who controls 27.14% of the firm through his Piedmont investment vehicle.
He, along with Elpida, the investment vehicle of Irish horse racing magnates John Magnier and JP McManus who own 23.54%, has previously nominated four directors who sit on the board of M&B.
Aberdeen said it has also voted against the re-election of these four board members, reigniting a long-running spat over the independence of the firm. The history of shareholder disquiet with the pub group’s governance stretches back to 2010, when Lewis and his allies ousted chair Simon Laffin.
The four directors also attracted ‘no’ votes between 22% and 26% at last year’s meeting, earning a place on the U.K. Investment Association’s watch-list. The pubs operator hasn’t yet released the results of the January 22 vote.
In the past Lewis has been accused of engineering a series of boardroom purges since arriving on the register in 2008. By 2015 M&B had got through five chief executives in six years. In 2011, Lewis made a failed £941m takeover bid for the group which owns brands such as All Bar One, Harvester and Toby Carvery.
Lewis, who is based in the Bahamas, is the currency trader who bet against the pound on Black Wednesday in 1992, growing his fortune by more than the £1bn gained by U.S. investor George Soros.
Deborah Gilshan, governance director at Aberdeen, said: “In our view, board independence has deteriorated significantly, and demonstrably so.
“The senior independent director left the board at the end of 2018 to concentrate on his other roles and a replacement has yet to be appointed.
“In addition, board diversity in relation to gender hasn’t improved as there remains only one female nonexecutive director.”
She said independent shareholders need to ensure that there are sufficient independent directors so that all shareholders are properly represented in the boardroom.
“A properly balanced board, with sufficient independence, is a cornerstone of good corporate governance,” she said. “It becomes even more important when large minority shareholders have board representation.”
M&B chairman Bob Ivell said: “As you will appreciate, it is critically important that we appoint the right people to our board. We are engaged in a process for the recruitment of a new nonexecutive director.
“I can reassure the shareholders that the board is totally committed to embracing diversity in its composition.”
This article also appeared on MarketWatch’s sister publication Financial News
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