SHAREHOLDERS of besieged law firm Slater & Gordon issued a further sign of their discontent at the company's Annual General Meeting held last Friday in Melbourne, when more than 43 per cent voted against the company's remuneration report.
As a result, the firm, which is currently subject to a class action from its own shareholders in relation to the acquisition of UK firm Quindell, received a 'first strike' on its executive remuneration - a clear indication of investor frustration following a disastrous year for the firm.
If Slater & Gordon receives a "second strike" next year, which is another vote against its executive remuneration greater than 25 per cent, it will cause a spill of the board.
Slater & Gordon's purchase of UK professional services firm Quindell led to a $1 billion write-down, which significantly impaired its financial accounts and saw its share price crash by 90 per cent.
The company's share price fell even lower last Friday, closing 2.78 per cent weaker at 35 cents.
To add further insult to injury, more than 30 per cent of shareholders voted against awarding chief executive Andrew Grech service rights and more than 25 per cent of investors tried to block the award of performance rights to Gresch.
In response to the voting results over remuneration, Chairman John Skippen (pictured) says: "In light of this we will review our remuneration structure and this will be reported to shareholders in our fiscal 2017 remuneration report."
"We understand shareholder concerns about the current value ascribed to their shares, but we aimed to balance that against the need for us to provide market competitive remuneration packages to attract and retain staff and to address some of the critical matters that faced the business last year."
Earlier this year, it was announced that chief financial officer, Bryce Houghton, and chief operating officer, Felicity Pantelidis would both be receiving bonuses to the sums of $189,000 and $93,750 respectively, despite the dividend being cancelled.
Grech did not, however, receive a short-term bonus in FY16 or any increase to his annual salary for FY17 after the fallout from the Quindell acquisition.
More to do to turnaround UK business
In Skippens' opening address to shareholders at the AGM, he reiterated the apology he issued earlier this year.
"We are sorry for the financial losses you have suffered and as a board we are doing everything we can to ensure the Group's financial performance is restored to sustainable levels as quickly as possible," he says.
The company has put in place a performance improvement program to mend its previous failures in the UK which Skippen acknowledges still needs "a lot more work."
CEO Grech adds, "The UK performance improvement programme is beginning to deliver some results. It is important to recognise that this is a business transformation programme which will take time to complete."
"We are substantially through phase 1 which focuses on a re-organisation of people into the three legal services businesses and a rationalisation of the number of sites at which we have a presence. Phase 2 is focused on improving productivity and cash conversion."
A special board committee has also been established by the firm to actively monitor business improvement activity and the board has appointed an independent UK based expert to act as advisor to the special board committee.
The silver lining for the company, Skippens says, is the performance of the Australian business which was broadly in line with expectations.
The share price (ASX: SGH) as at 12.00 pm AEST was 36 cents.
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