A third of shareholders voted against Lookers directors’ remuneration packages – including CEO Mark Raban’s £450k salary – at a general meeting yesterday.
The shareholder revolt over pay packages saw nearly 29 per cent of shareholders vote against the recommendations of the company.
In a Q&A issued to shareholders ahead of the meeting in an effort to quell a rebellion, Lookers said it was aware advisory bodies had recommended voting against the remuneration report.
The row mostly centres around CEO Mark Raban’s pay rise to £450,000 a year – the same salary previous CEO Andy Bruce received – following his promotion from CFO in February.
Lookers told its top 10 investors in an email ahead of the meeting that Raban had been selected as the best candidate for the role after interviewing several others from outside the group.
‘Following interviews with external candidates and given the company’s situation, the Remuneration Committee did not believe a suitable candidate could be secured for lower remuneration than that offered to Mark,’ said the investor note from Lookers.
The troubled dealer group pointed out that directors took pay cuts during lockdowns and bonuses were cancelled, so voting against the pay packets it said was ‘harsh’.
However, despite the attempts to assure investors, 28.91 per cent of shareholders voted against the remuneration report at the general meeting.
In response to the vote, the company acknowledged the ‘concerns raised by shareholders’ and said it would ‘reflect’ on them.
percentage of Lookers shareholders voting against directors’ pay
Lookers added: ‘As noted in the recently published annual report, the Remuneration Committee will continue to review the appropriateness of the remuneration policy as the business strategy evolves during the early part of 2021 and will continue to engage to the extent any changes are proposed.’
Shareholders also voiced their anger at the Annual Report and 2019 accounts, with 16 per cent of them voting against adopting the papers.
Lookers was also quizzed by shareholders ahead of the meeting about why the accounting irregularities in the 2019 annual report were not picked up by the internal audit teams and asked whether the group had claimed any manufacturer bonuses incorrectly.
Lookers admitted that the ‘fraudulent activity’ in the group and accounting irregularities ‘identified control weaknesses’ and a ‘disappointing level of cultural and behavioural’ issues.
But the dealer group said it believes it has now taken ‘remedial action’ to strengthen internal controls and accounting procedures.
Lookers also said manufacturer bonuses had not been claimed incorrectly.
It added: ‘One operating division created fictitious journal entries to recognise non-existent manufacturer bonuses.
‘The initial misstatement was created in 2018, the entries being reversed in 2019 and further fictitious sums being recorded in 2019.
‘These fictitious entries enabled the division to achieve its targets for the year, were entirely internal in nature and were never communicated to, reported to, nor claimed from the relevant manufacturer.’
Lookers has faced an ‘annus horribilis’ in 2020 with a series of issues that have dogged the car dealer group.
It has been forced to delay its results on a number of occasions as the board worked to unravel serious issues.
It uncovered an internal fraud that has been reported to police and is still awaiting the results of an FCA investigation into its practices that it has put £15m aside to deal with.
Shares in the dealer group were suspended in July and hopes to reinstate them for trading in December were dashed when the group delayed its interim results.
Lookers timeline: What’s happened when?
December 18, 2020 – Lookers tells investors that its interim results, promised to be delivered before the end of the year, will now not be published.
December 9, 2020 – Lookers reveal interim CFO Jim Perrie has quit early and say it is ‘unlikely’ the interim results would be out before the end of the year.
November 25, 2020 – Lookers finally release their annual accounts for 2019 showing a statutory loss for 2019 of £45.5m. Promise interim results in December and the hopeful reinstatement of shares on Stock Market.
October 31, 2020 – Long standing Lookers non executive director Tony Bramall, one of the group’s major investors, bought forward the date he would leave the board to the end of December. No reason was given for his early departure.
October 19, 2020 – Lookers updates market on performance in Q3, but still no word on its 2019 accounts or the FCA investigation. Analysts expect results to be out before December.
August 20, 2020 – Accounts delayed for the fourth time and no promise given as to when they’ll be published.
June 9, 2020 – Lookers says it will suspend shares on July 1. Delays accounts for third time and says they’ll be published ‘no later than the end of August 2020’.
June 5, 2020 – Lookers says it will axe 12 dealerships, cut 1,500 jobs.
May 2020 – Pendragon CEO Bill Berman admits he wrote to Lookers to discuss a merger and updates Stock Market to that effect. Move described as ‘two drunk men bumping into each other in a bar’.
April 2020 – Fraud investigation deepens. £4m charge revealed and firm says there could be more. Delays accounts to June.
March 12, 2020 – New chief operating officer Cameron Wade leaves role after only a month in post
March 11, 2020 – Lookers delays results saying in final stages of preparation ‘potentially fraudulent transactions’ in one division were discovered. Promises results in April.
November 2019 – Chief executive Andy Bruce and chief operating officer Nigel McMinn leave firm abruptly
June 2019 – FCA launches review into sales processes at Lookers between January 2016 and June 2019. Lookers cannot ‘estimate what effect, if any, the outcome of the investigation may have’.
December 2018 – Lookers launches independent internal audit into sales process. It eventually finds ‘control issues’ in sales process where ‘improvements’ are needed. Findings handed to FCA.