Boohoo boardroom saga continues as second proxy adviser rebukes Frasers' plans
By Benjamin Chiou
Date: Thursday 12 Dec 2024
(Sharecast News) - Independent proxy voting adviser Glass Lewis has recommended Boohoo shareholders vote against Frasers Group's proposals to strong-arm Mike Ashley on to the board of the fast-fashion retailer.
The recommendation, with is in line with comments from Boohoo's own board and another proxy adviser ISS earlier in the week, come before a general meeting on 20 December, at which shareholders will decide whether Ashley and associate Mike Lennon are to be appointed as directors.
Glass Lewis said that "appointing a director with significant historical ties to Frasers, without a comprehensive agreement in place to mitigate potential conflicts of interest, could raise further concerns among investors".
It also suggested that Frasers' intentions may not be aligned with the interests of Boohoo's shareholders, since the company is allegedly refusing to provide necessary governance commitments.
The adviser claims that the proposed appointments could disrupt Boohoo's ongoing business review and destabilise the business, with Frasers acting only in its own commercial self-interest. "Frasers has prior history of this sort of corporate behaviour," it said.
Ashley wants a seat on the board following a near-90% crash in the share price over the past five years, which he blames on management incompetence. He had initially requested to be appointed chief executive - only for Boohoo to replace CEO John Lyttle with former Debenhams boss Dan Finley in early November - so is now seeking to assert influence as a director.
In an open letter on Thursday, Frasers hit back, saying that Boohoo had "grossly exaggerated any perceived conflicts and governance concerns as a thinly-veiled excuse not to appoint Mr. Ashley and Mr. Lennon as directors".
The company claims that Ashley and Lennon have already stated that they are willing to sign up to certain governance commitments and "well-established legal protocols" to manage existing and future potential conflicts of interest.
However, it added: "Boohoo put forward an unreasonable list of purported governance requirements that it wants from Frasers. These requirements are a massive overreach, with no basis in law, any rulebook or acceptable corporate practice," Frasers said.
"In Frasers' view, what this boils down to is that Mahmud Kamani, Boohoo's executive vice chair, does not want Mr. Ashley or Mr. Lennon appointed, as he fears this would dilute his influence over the board," the company said.
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