The embattled fashion retailer French Connection (FCUK) has come under fresh pressure for change from its shareholders, as the board of directors approve the controversial reappointment of chief executive and chairman Stephen Marks.
Independent investors have been highly critical of the state of the business over the past five years, as its consecutive losses have caused its stock value to divebomb. These came to a head during the company’s annual general meeting (AGM) last week, accusing Marks of “not playing it clean”.
Marks remains at the heart of the criticism, refusing to give into pressure to relinquish his dual role as both chairman and chief executive. Other critical concerns for shareholders included a lack of transparency over bonuses and an equal lack of truly independent directors.
During last week’s AGM both Marks and the non-executive director Dean Murray were reappointed by directors. Over 53 per cent of independent shareholders were opposed to both these reappointments.
According to listing rules, any election of non-executive directors with a controlling shareholder who owns more than 30 per cent of stock must be approved by independent investors.
Mark’s owns 42 per cent of the company, meaning FCUK would fall under these guidelines. However, FCUK argued that Murray was no longer classed as an independent director under corporate governance rules as he has spent nine-years on the board.
This move has been highly condemned by shareholders, including activist group Gatemore Capital Management who own eight per cent of the company.
“I think it’s absurd that the outcome relied on a count of hands at the annual meeting,” Gatemore managing partner Liad Meidar said.
“It’s clear that independent shareholders strongly oppose this board composition. There is no independent board.
“You have to ask what’s the purpose of governance code and a set of recommendations that doesn’t have teeth.”
This decision may be open to challenge from investors.