The Hut Group under fire over £4.5 bn listing
Corporate governance failings leave investors in a sweat
tHe Hut Group has been accused of ‘awful’ corporate governance standards ahead of its blockbuster listing.
the British online shopping business will float in mid-September with a value of £4.5bn – one of the biggest london debuts in years.
the deal could land founder Matthew Moulding a £700m windfall.
But critics criticised the ‘outrageous’ privileges that will be retained by Moulding ( picturedbelow) even after the Hut Group becomes a public company on the london Stock exchange.
investors are being invited to buy some £920m of new shares in the company, which will float around 20pc of its total equity.
But Moulding, 48, will retain sweeping powers as executive chairman – combining the roles of chief executive and chairman – while also holding a ‘ founder’s share’ that will let him veto takeovers of the company.
And the company is also transferring its properties into his personal ownership – meaning he will be able to charge it £19.4m in annual rent.
the properties include the Hut Group’s main warehouse and its £1bn headquarters, which is still under construction.
Moulding insists the role of executive chairman is common at other top global companies, including investment banks JP Morgan and Blackrock.
However, the position is frowned upon under City rules because it means the board lacks a powerful, independent chairman to hold the executive to account.
Critics claimed that the unusual governance arrangements hurt the case for investment in the company and posed a risk to individual shareholders.
Cliff Weight, director of small investors’ campaign group ShareSoc, said: ‘this is awful corporate governance and i personally would be very wary.
‘Share classes that give one type of shareholder more powers than another devalue the secondary class and are therefore undesirable.
‘And a “founder’s share” which gives an individual exceptional powers is completely contrary to good corporate governance. Such rights seriously damage board effectiveness and the rights of other shareholders, knowing that they can be overruled at the whim of one individual.’
Francisco lopez de Saa, stewardship director at corporate governance firm Minerva, also claimed the the Hut Group had committed to paying Moulding ‘an outrageous amount’ in rent. ‘ there should be a separation of chief executive and chairman roles to provide a better balance of authority and ensure the company is responsibly aligned with the interests of investors,’ he told the times. A source close to the Hut Group yesterday insisted the property deal would decrease the company’s debts and that the properties had been fairly valued by independent advisers.
Under the arrangement, the Hut Group will transfer ownership of its property holding company to another one ‘owned and controlled’ by Moulding personally. it will then lease 14 sites from him, including its new headquarters.
in its float documents, the Hut Group says its dealings with Moulding’s property company will be overseen by a panel chaired by senior independent director Zillah Byng-thorne.