M&B board given rough ride at AGM
The board of Mitchells & Butlers has been given a very rough ride at a stormy meeting of shareholders.
The meeting took place this morning, two days after the revelation of huge losses on an aborted property deal with activist investor Robert Tchenguiz.
There was applause when one shareholder asked non-executive chairman Roger Carr to consider his position.
Another shareholder likened Carr to a "drunkard in total denial" after he had defended the actions of the board that led to loses of £391m pre-tax as a hedge position linked to the joint venture was closed.
The shareholder said the board has "punted the company on the 4.30 at Epsom".
You have made a right mess of this company. This year has been a complete disasterM&B shareholder
Another shareholder said Carr's "emollient words were almost insulting" to the shareholders.
One other shareholder, in the large audience at the Queen Elizabeth Conference Centre, said that finance director Karim Naffah had been made a scapegoat for the hedge loss, adding: "What you have said isn't good enough. This happened on the board's watch."
Another shareholder told Carr: "You have made a right mess of this company. This year has been a complete disaster. You and the board elected to go down this road. You have wasted the efforts of the employees on one flight of financial madness.
"Someone thinks they are a financial whizzkid - you have taken your eye off the ball. You've only got yourself to blame and you've dragged us along."
The shareholder told Carr that the finance director may have been sacked but he was not the only one responsible for the situation."The buck stops with you."
Dreadful single loss
Carr said he understood shareholder anger but that his "instincts were not to leave the ship".
The board had tried to release value and execute its strategy in a professional way.
Unprecedented market turmoil had led to "a dreadful single loss".
He described Naffah as a man of "complete professional honour" who felt honour-bound to tender his resignation.
He was leaving with a year's salary and his share options as he was entitled to.
Shareholders were told the board had to balance the interests of the more newly-arrived shareholders - 60% of the share register - who wanted short-term value extraction from the M&B property portfolio and the interests of longer-term shareholders.
At a meeting after the AGM with journalists, chief executive Tim Clarke intimated that the hedge was not made contingent on the release of the debt for the proposed joint venture because the market for swaps was fairly illiquid and there was significant cost involved.
The board also had full written, credit-approved terms on offer. Clarke declined to be drawn on when and if Robert Tchenguiz's R20 closed its parallel hedge positions arranged ahead of the deal in July last year - one market rumour is that Tchenguiz closed his hedge position towards the end of last year saving himself substantial further losses.
This was a matter for R20, said Clarke.
