Glenveagh executives shares plan criticised ahead of AGM

Glass Lewis maintain so-called founder shares scheme ‘appears excessive’

An influential adviser to big investors in Glenveagh Properties has criticised the publicly-quoted homebuilder's lucrative stock plan for its three top executives ahead of the company's annual general meeting (agm) next week.

Proxy firm Glass Lewis said the terms of the Glenveagh's so-called founder shares scheme, whereby executive chairman John Mulcahy, chief executive Justin Bickle and chief operating officer Stephen Garvey are entitled to 20 per cent of the company's total shareholder return (TSR) over five years, "appears excessive" when compared to similar plans.

As Glenveagh has not yet started paying dividends, the TSR is currently comprised solely of share performance.

Benefits under the scheme are by way of converting founder shares into ordinary stock, subject to the stock price rising at a minimum annual 12.5 per cent rate. The three founding executives received an initial 18.99 million ordinary shares in the first conversion last year, valued at €21.8 million at the time.


“While we acknowledge that the details of this scheme were outlined in the company’s prospectus document, and that the scheme has been in place since the company’s listing in 2017, we believe that shareholders can reasonably question whether such awards are warranted or in the best interests of the company and its shareholders,” said Glass Lewis.

“Furthermore, we do not believe that the share price performance condition is an appropriate barometer of a company’s performance post-IPO, as it may reward participants as a consequence of market conditions rather than the contribution of the executive.”

However, Glass Lewis has stopped short of recommending that shareholders vote against Glenveagh’s remuneration report at the agm, which takes place on June 7th, as the founder-shares plan was contained in its IPO documents in 2017 as the company courted investors.

Former executive

Glenveagh, formed from the combination of residential development sites accumulated by US private equity firm Oaktree following the Irish property crash, and the assets of Maynooth-based builder Bridgedale, raised €550 million in its IPO.

Mr Bickle is a former executive at Oaktree, while Mr Mulcahy previously served as head of portfolio management at the National Asset Management Agency (Nama) and, before that, as chief executive and chairman of Jones Lang LaSalle Ireland. Mr Garvey was the chief executive of Bridgedale.

Shares in Glenveagh have rallied almost 9 per cent so far this year to 77c, having being sold off sharply in the second half of 2018 following a badly-received placement of €213 million of additional shares and a move by Oaktree to sell half its 16 per cent stake in the company in July, as well as general weakness across equity markets. The shares continue to trade at a discount to their €1 IPO price.

Fellow housebuilder Cairn Homes introduced the founder shares incentive plan to the Irish market when it floated in 2015. More than 80 per cent of 100 million founder shares have since been converted into ordinary stock.

Cairn's three founding directors, Scottish accountant and serial entrepreneur Alan McIntosh, chief executive Michael Stanley and his brother Kevin Stanley, have sold almost 32.6 million of these shares into the market in two placings over the period. The two transactions raised a total of €49.4 million for the executives.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times