Caffyns (LSE:CFYN) has been a family-dominated firm for over 150 years, despite it now being a Premium Listed company on the LSE. The family have been accused by a bulletin board writer of running a corporate board of directors which “is grossly self-indulgent”.
I need to start the process of assessing whether this is true to the point of being seriously detrimental to minority shareholder interests, a group to which I now belong.
The family do not control through ownership of more than 50% of the ordinary shares, of which there are 2.695m in issue. They control the firm through their holding of all the 2m 6% Cumulative Second Preference Shares, which each have the same voting rights as the ordinary shares (one vote per share), except in a few special situations related to the Premium Listing provisions, such as voting to leave the LSE (the prefs lose the right to vote).
In addition, Caffyn family members not sitting on the board own around 16% of the ordinary shares. Sarah Caffyn, who is a board member, has 46,232 (1.7%) ordinaries and Simon Caffyn, CEO, has 76,988 (2.9%). Also, the Caffyns’ Pension Fund holds 4.66% of the ordinaries.
(There are some other preference shares held by the family but they do not carry votes and are not relevant to the power dynamics of the firm).
Evidence for the self-indulgence charge
We’ll start with the money paid to shareholders, staff and directors over several years.
£mDividends + cost of buying the company’s shares Staff pay (including directors) Issue of shares for SAYE Directors’ emoluments
20210 13.6 0.003 0.59
20200.61 13.7 0 0.66
20190.61 13.7 0 0.74
20180.61 13.1 0 0.63
20170.61 + 0.9 15.0 0.3 0.81
20160.60 + 0 15.7 0 0.88
20150.56 + 0 14.8 0.005 0.86
20140.36 + 0.39 14.5 0.3 1.153
20130.33 + 0 14.2 0 0.91
20120.34 + 0.1 15.0 0 0.83Clearly, the directors have taken more cash than the shareholders have received, and £590,000 in director’s pay seems a lot for a £12.5m company. But, I suppose, at least director remuneration has fallen from the heights of 2014.
The question we need to ask is whether……………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Prof. Glen Arnold
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