Greencore board faces barrage of shareholder criticism

The board of Greencore faced a barrage of criticism from shareholders yesterday at the company's annual general meeting in Dublin.

There were sharp exchanges between some shareholders and the chairman, Mr Bernie Cahill, over recent falls in the company's share price and the composition of the board.

The company's 15 per cent stake in the US sugar group, Imperial Holly and the prices it paid for cereal crops also provoked heated debate.

The chief executive, Mr David Dilger, told the meeting Greencore would be "prudently re-positioned in the fast growing" segments of the value added food sector which would increase shareholder value.

He said by the end of the year, for the first time, more than half of Greencore's operating profits would come from its food division.

Mr Dilger said the company submitted a bid for one of four Tomkins flour mills in Britain, but Tomkins had not made it clear whether it would sell the mills individually or as group.

It is understood that if Tomkins opts to sell them as a single package, Greencore would not be interested.

Despite his statement that Greencore had performed better than many of its "peer group", Mr Dilger was criticised for not taking steps to improve the share price.

One shareholder said he was shocked when he checked his morning newspaper to see Greencore's share price at £2.11 (€2.68). "The least we can expect is a 6 to 8 per cent return on our shares every year," he added.

"I should have invested in a company like Yahoo! Just remember that you guys are my children's education," he added. Another shareholder replied that he would be "worried about getting an education for my children", if it was paid for with Greencore shares.

He said a major move into the value added food market was not advisable when no member of the board had experience in the sector. Mr Cahill said this was not true - he had spent many years in the food sector.

The company's stake in Imperial Holly - whose net profits have fallen from $7.3 million (€6.5 million) to $5.3 million - was the subject of rigorous questioning. The former IFA president, Mr Joe Rea, asked repeatedly what return the company had got from the investment so far.

He said the investment had proved "dismal" and was the result of having "too many accountants on the board".

Mr Dilger said Imperial Holly had suffered along with the whole sugar industry. He was confident the company was now taking the right steps and margins would increase from 2.8 per cent to 6.8 per cent.

He said the company did not see its stake as "a strategic investment", but would sell when the time was right.

Mr Kevin O'Sullivan, chief financial officer, said that last year the company had achieved a 10 per cent return on its $58 million investment, but he expected this to improve in the long run.

Another shareholder asked the board to comment on the performance of rival food group, IAWS. "Mr Philip Lynch runs a very tight ship over there and his share price has been doing very well," he said. Mr Cahill said it would be wrong to comment on the performance of another company.

There was then a debate about the composition of the board. One shareholder said it was unusual that not one employee was on the board. He was supported by another shareholder, Mr Pat Coffey, who said a "farmer grower" should be added.

"If the board was a football team, you wouldn't fill it with full backs and no forwards, would you. We need some forwards and not just loads of accountants," he said.

Mr Rea said there were already enough accountants on the board and one of them, Mr Jack Casey, the managing director of New Ireland Holdings, had recently been appointed. Other shareholders supported this statement.

Mr Cahill said the board's nomination committee would look at all the issues, but some shareholders expressed anger when he declined to outline when the issue would be dealt with.

Mr Rea said the shareholders were being treated with "disdain". Another said Mr Cahill was acting like a teacher and the shareholders were his pupils.

When voting took place to reappoint retiring directors - Mr Casey, Mr Patrick Galvin, Mr O'Sullivan and Mr Declan Scott - some shareholders objected. However, Mr Cahill pressed on with the meeting and said he had dealt with all points raised.

However, he was interrupted again by Mr Rea and others, who said the board needed a "different perspective". Mr Rea demanded to know what each non-executive director did for "their £29,000 every year". Mr Cahill said "you don't get the right people unless you pay them".

After further argument the directors were re-appointed. Mr Rea said after the meeting he would be attempting to set up a Greencore farmer shareholders' group to address some of the issues raised.