Shareholder advisory group ISS backs Boohoo in Mike Ashley board spat
By Michele Maatouk
Date: Monday 09 Dec 2024
(Sharecast News) - Boohoo said on Monday that international shareholder advisory group ISS has recommended that its shareholders vote against resolutions seeking board representation from Mike Ashley' Frasers Group.
In a letter to Boohoo shareholders published on Sunday, Mike Ashley accused the company's bosses of "panic-driven mismanagement" as he warned the fashion retailer against a "fire sale" of assets.
In the letter, Ashley said shareholders had "every right to feel angry and frustrated" at the board's "gross mismanagement".
"I see brands that are underperforming and no clear strategy to halt the decline," he wrote. "I see panic-driven mismanagement resulting in reckless decisions that are obliterating shareholder value and jeopardising the company's future.
"The recent game of musical chairs - appointing Dan Finley as CEO, Mahmud Kamani as executive vice-chairman and Tim Morris as chairman - is the epitome of chaos, a desperate attempt to mask dysfunction at the top."
He added: "Debenhams should not be sold and if any other non-core asset sales are deemed necessary, I will insist on a rigorous process to maximise value, with independent advisors and shareholder consultation before any decisions are made."
Boohoo is due to hold a general meeting on 20 December at which shareholders will be asked to vote on whether they agree to admit Ashley and restructuring expert Mike Lennon to the board.
But Boohoo said on Monday that ISS has recommended that its shareholders vote against these resolutions.
"ISS states that Frasers has offered a superficial view of performance and no specific plans for change and the two Frasers candidates, Mike Ashley and Mike Lennon, have real conflicts of interest, concluding that board change at Boohoo Group is not warranted," it said.
Chairman Tim Morris said: "The board of boohoo welcomes the backing of ISS, which is in line with the recommendation we have made to reject the proposals from Frasers Group.
"We are clearly focused on doing what is right for all investors, following the launch of our Business Review to unlock and maximise shareholder value, the appointment of Dan Finley as our CEO and a successful fundraising."
A spokesperson for Frasers said the ISS opinion pre-dated the statements by Mike Ashley on Sunday.
"Mr. Ashley set out clearly in his letter of 8 December his determination to work on behalf of all Boohoo shareholders and support Dan Finley to deliver on the opportunities to turn around the fortunes of the group and restore shareholder value," the spokesperson said.
"He has been very clear he would not want Debenhams sold or any fire sale of assets and has put on record his commitment to transparency and shareholder consultation, something badly missing under the current board. To achieve this, Boohoo shareholders must vote for the resolutions on 20 December."
Dan Coatsworth, investment analyst at AJ Bell, said: "Recommendations from ISS or fellow proxy adviser Glass Lewis rarely form the backbone of an announcement to the stock market, but Boohoo has seized upon ISS's latest recommendation to launch another attack on Frasers. This follows comments at the weekend from Mike Ashley that Boohoo must avoid a 'fire sale' of assets.
"The fate of Boohoo will be in the hands of its shareholders when they vote on 20 December.
"At 35.88p, Boohoo's share price is on its knees, trading at a fraction of the 400p+ level seen in 2020. Long-suffering shareholders might welcome someone of Ashley's calibre joining the board and offering a different viewpoint to revive the business. Equally, some shareholders may not take kindly to his vulture-like tendencies and view a board appointment as a pre-cursor to Frasers muscling in and taking Boohoo out on the cheap.
"What's certain is that both parties are going to be working flat out over the next 11 days to get their viewpoint across and win over Boohoo shareholders."
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