Rebel shareholders succeed in ousting M&B chairman

Dozens of ordinary Mitchells & Butlers' (M&B) shareholders used yesday's annual general meeting (AGM) to voice their anger at the behaviour of 'rebel' shareholders who finally succeeded in ousting Simon Laffin, the managed pub company's chairman.

As expected, John Lovering, the outgoing chairman of retail giant Debenhams, was elected M&B chairman at the AGM, but his appointment was not without controversy.

A volley of criticism was levelled from floor of the AGM in Birmingham's International Convention Centre against those arguing for an overhaul of the board, namely Piedmont Inc., which represents 23 per cent shareholder Joe Lewis, and Elpida, the Irish investment firm which represents the 17 per cent stake in M&B owned by business tycoons JP McManus and John Magnier.

Shareholders took turns to berate the actions of both firms. One called M&B "the best pub operator in the UK" and said those unhappy with the way the company was being run should "sell their shares and buy Punch Taverns stock instead", a comment which drew a round of loud applause from the audience.

Another said the media coverage of the recent controversy over the board's make-up had made "a mockery of the company", although he added he was disappointed the group would not pay shareholders a dividend until the end of the next financial year, due to the level of its net debt.

Meanwhile Laffin, along with directors Tony Bates and Ron Robson, were prevented from acting as directors of M&B for the duration of the AGM following a legal move launched by Elpida.

However Laffin spoke in a personal capacity to praise the work of M&B chief executive Adam Fowle and condemn what he called a series of personal attacks directed at him in recent weeks by certain shareholders.

He said he was "concerned" that Joe Lewis was trying to control the composition of the M&B board.

However Edward Banks, a representative from Elpida, said the board was responsible for £500m of interest rate swap losses and denied claims it was meddling in the affairs of M&B.

"We simply want to see the company run better," Banks said. "This board has a poor record with shareholders' money. The company has enormous potential but the shares are currently undervalued." His statement from the floor of the AGM was met with silence.

Following the AGM Laffin, Bates and former M&B chairman Drummond Hall were all voted off the board.

Following his own appointment John Lovering said he and his board colleagues "wanted to put recent history behind us and move forward committed to the interests of all shareholders.

"We will conduct a thorough review of the business which will be presented to all shareholders by the end of March. We will look at all aspects of the business: the number of brands and their positioning; the efficiency and allocation of capital expenditure; and the level of overhead costs within the business.

"Our main message is to all of our employees in the business. You have focussed on delivering great experiences to our customers and we promise to you that the Board will now be a source of leadership and direction not discord and distraction. Together we can build upon Mitchells & Butlers' position as the leading managed pub company."

Lovering, together with Simon Burke, Mike Balfour and Jeremy Blood, noted that a number of institutional shareholders had expressed concern that they were nominated by a shareholder rather than emerging from a nomination committee process.

Responding to this, the quartet said they shared such concern "and propose that we will stand for election at the next AGM and will stand down if we do not command support from a majority of shareholders excluding Piedmont Inc.".

In a statement after the vote, Laffin, Hall and Bates, together with Sara Weller - who was stepping down as a director after the AGM - said the board had taken "a principled stance in defending the rights of all shareholders". 

"Of the 407 million shares in issue, there was a very high turnout of over 80 per cent (around 335 million shares) on resolutions concerning the directors, reflecting great shareholder interest in this issue. 

"We understand Piedmont, Elpida and six other shareholders together account for around 213 million shares. The total votes cast against the appointment of Tony Bates and Simon Laffin were 199 million and 214 million shares respectively. We believe this shows that an overwhelming majority of other voting individual and institutional shareholders, were in favour of their appointment.

"We would like to thank all of the many thousands of shareholders, large and small, who have supported the board's position.

"We wish the new board well and trust that it will be allowed to continue the work already in hand to strengthen further this great business."