M&B set for boardroom blitz
High noon in the on-going battle of wills between Mitchells & Butlers (M&B) management and rebel shareholders is set for the company's annual general meeting today.
It's set to be the third highly-charged AGM at M&B since the millennium. First there was the AGM that was dominated by Hugh Osmond's attempt to block demerger of Six Continents (small shareholders unimpressed by his flash ways).
More recently, there was the January 2008 AGM — management was on the receiving end of a tongue-lashing from small shareholders not impressed by the management's flash ways — £391m pre-tax down the drain after losses on complicated hedge swaps.
This time, the meeting might have been dominated by small shareholders giving management a second tongue-lashing over last May's pool of red ink (£69m pre-tax down the drain after, er, more losses on hedge swaps).
It's now likely small shareholders will be torn between anger over hedge losses and ambivalence over the tussle between the board and dissident big-boy shareholders' attempts to re-cast it in a fashion more to their liking.
M&B's board has accused shareholder Joe Lewis and his allies of trying to gain control via the back door by nominating four of its own non-executive directors. Lewis's investment vehicle, Piedmont, has accused M&B of a culture of obfuscation and excess (without giving much in the way of detail).
As it is, it might be handy for shareholders if the squads of existing non-executive and nominated non-executive directors lined up by the two sides could wear football shirts with their names on the back for ease of identification at the AGM.
M&B got itself in a terrible bind over its 2007 aborted property deal. The consensus was that management was too compliant to the bidding of activist shareholder Robert Tchenguiz — and too slow extricating itself from the financial mess that followed.
There should have been a widespread clearing out of non-executives and advisors after this debacle. Shareholders were never given a proper explanation — a third-party investigation should have followed so those at fault could be properly identified.
Chairman Roger Carr promised as much after the 2008 AGM. What they got instead was a second round of hedge losses in May 2009, leading to the resignation of then chief executive Tim Clarke.
It's hard not to feel sorry for current chief executive Adam Fowle, who presented a clear-eyed vision for M&B's future last week based on having fewer key brands.
(Oddly, the firm paid consultants £12m to undertake a strategic review in early 2008 — if it didn't come up with something broadly similar, is it too late for M&B to ask for its money back?)
Current shareholders want results now rather than later — and have quite a lot of ammunition from the strategic mistakes of previous management.
