Second Stock shareholder urges CEO removal

An internal revolt at Stock Spirits Group is building after a second shareholder in the Central and Eastern European producer called for the resignation of CEO Chris Heath.

Chris Heath, CEO of Stock Spirits Group, is facing a shareholder revolt

Last week, Stock Spirits’ main shareholder Western Gate Private Investments Limited called for Heath’s departure and listed a number of concerns, including declining market share in Poland, an “under-performing” share price, and “spiralling” corporate costs.

Today, Templeton Emerging Markets Group, which owns a 4.2% stake in the company, said it supports “in principal” the proposals outlined by Western Gate.

Templeton has therefore also called for the “removal” of Heath from his current position and asked that a “reputable executive search firm” identify a suitable successor.

The company has also asked that two new additional independent non-executive directors are appointed to the board of the company and requested a board level review of Stock Spirits’ M&A strategy.

“As a shareholder of the company, we strongly believe in the good prospects of the Stock Spirits Group, the strengths of its brands and its potential to create shareholder value for investors,” Templeton said in a statement.

“That said, we are deeply concerned about the dramatic loss of market share in the Polish market and the lack of adequate corporate cost discipline within the company. We agree with Western Gate’s opinion that Stock Spirits Group would benefit from a fresh perspective at the board level.

“Therefore, we are very supportive of the principles in [Western Gate’s] proposals, which we believe are in the best long-term interests of all shareholders.”

Earlier today, Stock Spirits issued a positive trading update outlining its performance from 1 January to 31 March 2016, with CEO Heath insisting the group’s “root-to-branch” corporate review is “clearly delivering results”.

At the same time, Stock Spirits announced its AGM has been brought forward to 23 May due to the concerns expressed by Western Gate.

In 2015, the company’s operating profit plummeted 22% to €41.7 million, as total revenue dropped almost 11% to €262.6m due to tax hikes in Poland and “severe pressure” from competitors.