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Waterford Wedgwood accused of flouting stock
exchange rules
The Sunday Business Post 16 October 2005
Eamon Quinn
Waterford Wedgwood has been accused of running a
“coach and horses" through stock exchange guidelines at the expense of
both institutional and small shareholders by flouting major provisions of
the Combined Code of the Irish and British stock exchanges.
The unprecedented charges come in a major report on the company by
Manifest, a British firm which provides consulting services to large
institutional stakeholders on how to cast their votes at annual meetings.
Waterford Wedgwood hosts its annual general meeting this Thursday.
The Sunday Business Post understands that F and C Asset Management is set
to advise a “substantial number'‘ of shareholders on how to vote at
resolutions at Thursday's meeting. Richard Singleton, director of
corporate governance at F and C in London, said that institutions usually
followed their voting advice.
Waterford Wedgwood has already won a waiver from takeover rules. Tony
O'Reilly and his brother-in-law Peter Goulandris now control over 51 per
cent of the company, following the rights issue approved last June.
The Combined Code is designed to encourage best practices in running
companies, by setting guidelines on independence of non-executive
directors from major shareholders and their length of time spent on the
board.
Manifest research manager Alan Brett said Waterford Wedgwood had
“essentially completely ignored'‘ provisions of the Combined Code, and had
failed to provide shareholders with explanations.
“Their attitude is that we do not have to provide explanations,” he said.
Brett added that it was now “relatively unusual'‘ for companies listed in
London and Dublin not to provide explanations for failure to meet
provisions of the code.
“We found this curious,” Brett said. “The company said that each of its
non-executives were independent. It just said it considered them all
independent and that was despite a lot of evidence to the contrary.”
Manifest found issues under the code for seven of the eight
non-executives, and highlighted other major issues of concern.
David Sculley has a contract through Wellspring Holdings Inc to provide
consulting services to the value of $400,000 a year to Waterford Wedgwood
USA and All-Clad, the US unit which has since been sold.
There are no explanations why the company considers him independent.
Kevin McGoran has been on board since 1990 and he has received fees which
are not explained. He got euro 22,000 for serving on the board and
received another euro 67,000 for which were not explained by remuneration
report.
Gerald Dempsey has been on the board since 1986, and the Combined Code
would suggest nine years as being an appropriate period of time.
The company has not explained why it considers him to be independent.
Former chief executive Redmond O'Donoghue has been on board since 1985.
The Combined Code says that a former executive should not serve on the
board within five years.
No explanations for the size of pension contributions to John Foley, chief
executive of Waterford Crystal Ltd, who received a pension of euro 205,000
equivalent to 61 per cent of salary. A pension payment of €336,000 to
former group chief executive O'Donoghue was also not explained.
Peter Goulandris, deputy chairman at the company has family links to the
controlling shareholder. His sister Chryss, the wife of Tony O'Reilly, is
on the board. Goulandris himself has been on the board since 1996. “There
are family links, significant shareholding and tenure, and again, no
explanation why they consider him independent,” said Manifest.
Chryss O'Reilly has been on the board since 1995. Marriage to the
chairman, significant shareholding and tenure raise significant issues
under the code, said Brett.
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