French Connection founder criticised again by investors after AGM

By

Sandra Halliday

Published
May 30, 2017

Investors in struggling French Connection are voicing fresh criticism of founder, CEO and chairman Stephen Marks. Their complaints come after the board  confirmed him in his dual CEO/chairman’s role on a show of hands at last week’s AGM. Combined CEO and chairman roles are contrary to widely accepted principles of good corporate governance.

Investors accused Marks of “not playing it clean,” according to reports, over his continuing occupancy of the top jobs at the firm as well as what they say are unclear criteria around qualifying for bonuses and a lack of truly independent directors.

At the AGM, over half of independent shareholders opposed Marks’ reappointment as well as the reappointment of Dean Murray as an independent director.

Murray’s survival on the board is something of a surprise after calls for him and another independent director, Claire Kent, to step down had become very vocal. Critics have said they cannot be truly independent as they have been board members for many years and French Connection had earlier indicated that it would seek an alternative to Murray.
But with Christos Angelides, who joined as an independent in 2016, having recently left to become CEO of Reiss, French Connection clearly feels it needs all the experienced help it can get and Murray is staying on.

While stock exchange rules state that independent directors must be approved by other shareholders if the controlling shareholder has more than a 30% stake (which Marks does) the CEO argued that Murray coudl no longer be described as an independent as he has been on the board for over nine years.

Minority shareholder Gatemore Capital, which has been the most openly critical among the smaller stakeholders in the firm, claimed the result of the AGM means “there is no independent board.”

Gatemore, and other investors in the 45-year-old firm, have seen their holdings fall in value by almost 60% since 2013. It owns an 8% stake and other activist shareholders have a further 7%. Sports Direct chief Mike Ashley indirectly owns a further 11%. He has not commented on the issues around management and the board, although he has frequently denied speculation that he could mount a takeover bid.