Activist hedge funds have spearheaded a shareholder revolt over executive pay and appointments at Wagamama owner The Restaurant Group, the latest skirmish in a campaign pushing for a shake-up and partial sale of the struggling casual dining operator.
Just over 45 per cent of votes cast at TRG’s annual general meeting on Tuesday opposed the company’s pay report, which includes a £675,000 salary for chief executive Andy Hornby as part of a remuneration package that allows for up to a 150 per cent share award on top of his salary, irrespective of share performance.
Hornby’s re-election to the board was also opposed by about 16 per cent of votes cast, while almost a quarter voted against the reappointment of chair Ken Hanna and Zoe Morgan, the director in charge of the company’s remuneration committee, respectively.
The revolt at the AGM is the latest development in an increasingly acrimonious struggle over the future direction of TRG, which started earlier this year with Hong Kong-based fund Oasis Management going public about its shareholding in the company and complaining about TRG’s ailing share price.
Since then, several other funds have bought up stock and gone further than Oasis by calling for TRG’s operations — which also include Italian-American diner Frankie & Benny’s and pub chain Brunning & Price — to be broken up and sold off.
Activists control between 15 and 20 per cent of the stock, according to Hanna — chief among them is Oasis, which is the second-biggest shareholder with a 12.3 per cent stake. Activists Irenic Capital and Coltrane are also among the top-20 shareholders.
Speaking at the meeting, Hanna described the activist funds as “a vocal minority”. Fund manager Columbia Threadneedle, TRG’s biggest shareholder, has publicly backed management. “Our job as a board is to try and . . . keep everyone happy. It’s never easy but we will navigate our way through,” said Hanna.
However, Hanna signalled that management might be receptive to some of the activists’ demands, saying that “in due course, we will make some public announcements on our strategy”.
TRG’s share price is down more than 60 per cent since its last equity raise in March 2021, as the casual dining operator struggles in the face of rising costs and worries over a consumer slowdown.
Adjusted pre-tax profits across the group stood at £20.3mn last year, up 22 per cent on a year earlier when the business was affected by pandemic restrictions. However, like-for-like sales at Frankie & Benny’s, which in March announced the closure of 35 sites, fell 4 per cent year on year.
But Hanna did not silence his detractors. Orkun Kilic, founder of Berry Street Capital, which owns about 1 per cent of the stock, told the Financial Times that the board “has no respect for shareholder and stakeholder value”.
Kilic said a sale of some of TRG’s assets was “so obviously needed” but argued that management were “conflicted within themselves because they think about their seats and they think about their egos”.
Daniel Wosner, managing director at Oasis, said he was “very pleased” that the shareholder base had “come out in force to share their discontent [over executive pay]”.
But Kilic, who previously undertook an activist campaign alongside Oasis focused on manufacturer Premier Foods, said he feared there could be “deadlock” between activists and management unless an asset sale happened soon.
TRG acknowledged the “significant” shareholder revolt in a statement, saying the company would continue to consult with investors to find an “appropriate solution” over pay. “We remain firmly focused on executing our margin accretion plan,” it added.
