Dunstone unscathed at Talktalk after investors ignore governance warnings
TALKTALK’S chairman Sir Charles Dunstone walked out of its annual meeting unscathed after almost all of its investors ignored criticism from influential governance campaigners and yesterday voted for him to stay on.
Sir Charles won the backing of al- most 97pc of the broadband provider’s shareholders, despite the advisory firms Glass Lewis and ISS calling for him to go and the Investment Association issuing a so-called “red-top” alert against the company over its decision to issue new shares worth 20pc of its value earlier this year.
Sir Charles and fellow Carphone Warehouse founder David Ross own 40pc of Talktalk between them. The company’s two other largest shareholders Toscafund and Invesco also backed the fundraising, so he was not expected to lose the vote. But the failure of its other backers to rebel is a blow to the trio of governance campaigners, whose opinion can often be relied upon to spur dissent among shareholders.
All of Talktalk’s directors were backed by more than 90pc of shareholders and the only significant rebellion was over the board’s right to issue new shares, which 14pc voted against.
Criticism focused on Talktalk’s use of a so-called “cash box” share placing to raise £200m to pay down its heavy debts.
In the past, companies were forced to consult investors if they wanted to raise more than 10pc of their value but that was recently relaxed to 20pc. The IA changed its policy in the wake of Talktalk’s fundraising to automatically issue red-top alerts, its harshest level of criticism, against any board that uses pre-emption rights to issue shares worth more than 10pc of its value.
Andrew Ninian, its head of stewardship and corporate governance, said earlier this year: “Pre-emption rights are a vital shareholder protection and their misuse poses a serious threat to investors’ interests, and ultimately to the UK’S pensioners and savers.”
Talktalk is in the middle of a turnaround plan as it attempts to slim down and focus on selling low-cost broadband amid tough competition.