Western Gate calls for Stock Spirits chairman’s removal

Shareholder Western Gate has called for the removal of Stock Spirits’ chairman and senior independent director due to ongoing concerns about how the drinks group is governed.

David Maloney, chairman of Stock Spirits

In a statement released today (27 January), Western Gate said it intends to vote against the re-election of chairman David Maloney and the senior independent director of Stock Spirits, John Nicolson, who is also chair of the remuneration committee, at the upcoming annual general meeting (AGM) on 6 February.

In addition, Western Gate has requested an “immediate” appointment of independent replacements for the roles using an independent executive search firm.

Western Gate, which owns a 10% stake in Stock Spirits making it the company’s second-largest shareholder, has previously spoken out about its concerns that the firm is “being run in the best interests of the board rather than all shareholders”.

Western Gate said it “believes that the current culture of running the company for the benefit of the board rather than for shareholders comes from the top”. The group also questioned Stock Spirits’ merger and acquisition (M&A) strategy.

However, Western Gate said it will vote for the re-election of Miroslaw Stachowicz, CEO, and Paul Bal, CFO, who have “overseen significant improvement in the operational performance of the business”.

The shareholder will abstain from voting for the rest of the board.

Western Gate has recently called for a special dividend to be paid to investors, citing three key reasons: delayed returns from the acquisitions achieved with accumulation of earnings not expected until 2023; an “erratic” policy towards returning surplus capital to shareholders; and low rates of TSR (total shareholder return) that “compare poorly with representative peers”.

Francisco Santos, director, Western Gate, said: “For too long Stock Spirits has not been run for the owners of the company, the shareholders. We will be voting against resolutions, which we feel demonstrate poor governance and demonstrate poor culture, which starts at the top.

“We have made our voting intentions clear, and we urge other shareholders to vote for Resolution 20.

“Shareholders deserve to be rewarded for their patience and to be aligned to sector peers as the executive team executes a turnaround of the business.”

Stock Spirits responds

This is not the first time Western Gate has called for the removal of Maloney and Nicolson. The shareholder encouraged their removal in January last year.

Stock Spirits has previously defended the governance of the company.

Earlier this year, a spokesperson for Stock Spirits said: “We have a strategy of both organic and M&A-driven growth which, as our recent full year results show, is driving a strong financial and operational performance and is enabling payment of consistently increasing dividends.

“We continue to assess a range of more meaningful and value-creating M&A opportunities in both existing and new categories and markets but, as we have consistently said, if such opportunities are not realised then we will of course consider making additional shareholder distributions.

“It is our view that payment of a special dividend now would act as a significant constraint on our ability to execute on our M&A and organic growth strategy, which we firmly believe is the best way of improving returns for our shareholders.”

In light of the situation calling for their removal, Stock Spirits stressed that Maloney and Nicolson have the “unanimous support” of the board, and have had “instrumental roles” in the company’s financial operations.

A spokesperson for Stock Spirits said: “We note Western Gate’s voting intentions and, as ever, are committed to engaging with their concerns. David Maloney and John Nicolson continue to have the unanimous support of their colleagues on the board, and have played instrumental roles in overseeing the improved operational and financial performance noted by Western Gate.

“With regard to remuneration, we have a robust and competitive new policy, which is aimed at retaining, motivating and attracting key talent while putting the emphasis on long-term and consistent performance.

“As we have consistently and repeatedly said, we continue to assess a range of more meaningful and value-creating M&A opportunities in both existing and new categories and markets, but if such opportunities are not realised then we will of course consider making additional shareholder distributions.

“It is our view that payment of a special dividend now would act as a significant constraint on our ability to execute on our strategy, which we firmly believe is the best way of improving returns for our shareholders.”