To start off with I'd like to preface this round-up of today's proceedings with a bit of a disclaimer. The intention of this summary is to give a round-up of what occurred rather than any opinions.
Any opinions that are expressed are purely mine and do not necessarily represent KUMB.com or anyone else for that matter. I would also point out that these notes have been written from memory following a meeting that lasted over three hours. Any errors or omissions are therefore down to me. Finally I would like to state for the record that I attended the meeting as a shareholder independent of any group or campaign.Well it was an interesting meeting to say the least. The four directors present were Terence Brown (who chaired the meeting), Nick Igoe, Paul Aldridge and Charles Warner. The purpose of the meeting was to formally adopt the accounts for the year ended 31 May 2003, to deal with the re-election of Messrs Aldridge and Warner and to formally reappoint Deloite & Touche as the club's official auditors. However, a number of shareholders used the meeting to register their dissatisfaction with the way the club was being run, and this made for a lively few hours.
Prominent amongst those speaking against the board were members of the “WHISTLE” group that has been campaigning for the removal of certain board members. Mr Brown acknowledged that WHISTLE had moved to include a motion for the removal of the directors concerned but stated that the group had failed to submit the required number of signatures in time for their proposals to be discussed at the AGM, and had failed to deposit the money required to cover the expenses of arranging such a motion. Mr Brown added that the board would be prepared to address the proposals at a future EGM. Members of the WHISTLE group maintained that sufficient signatures had been submitted in time, however, Mr Igoe countered this by pointing out that the Companies Act gave little scope for discussion of items that had not been included in the formal agenda.
Reference was made to the Chairman's statement earlier in the year to the effect that the “battle for the club had been won”. Mr Brown explained that by this he meant that the sale of 4 players during the close season had prevented the club from having to go into administration, a fate he later described as “catastrophic”.
A shareholder bemoaned the lack of investment on the playing side of the club, pointing out that of a turnover of over £200m, there had been net investment on players of under £1.5m, despite the Chairman's statement in the annual report that the club was committed to “team building”. Mr Igoe admitted that in the five-year period covered by his summary contained in the Annual Report, the club had been one of the league's smaller spenders but pointed out that over the same period that the club had also been making only small operating profits and that the spending should be considered in that light., especially in view of the fact that the club also had a comparatively high wage bill. With hindsight, Mr Igoe said that it was arguable that the policy of acquiring a large number of players on “Bosman” deals where free or low-cost transfers were countered by higher wages costs might have hindered the club's ability to enter the transfer market. The financing of players came either from borrowings or from profits. The club had been unwilling to go into major debt to finance player purchases and the small operating profits reduced the amounts available for transfers, especially in view of the fact that for much of the period covered by the 5-year report, the club had been playing in a stadium that held only 26,000.
At this point Mr Brown pointed out that the five-year report prepared by Mr Igoe had been prepared in addition to the figures required by the Companies Act. Many of Mr Igoe's colleagues had considered the inclusion of the report to have been ill-advised as they felt that the content would be “thrown back in his face”. However, a shareholder said that he welcomed the club's transparency despite the obvious discomfort it caused the board.
Mr Brown was then questioned about the inclusion of some transfer income in the accounts on a “contingency” basis, bearing in mind the fact that the club had stated that all fees had been received “up front”. Mr Brown confirmed that the contingency fees referred to in the accounts related to one particular player whose fee had been based o him making a particular number of appearances and upon his gaining international honours. Although the total fee had been paid up front, in the event that the criteria were not fulfilled some of that fee would be repayable to the club concerned. However, Mr Brown said that the targets “were not particularly challenging” and that some of them had already been met. Mr Brown agreed that the deal was unusual, if not unique, but was unwilling to comment further on the deal for reasons of confidentiality.
A shareholder asked why the club appeared to be the only Premiership club in 2002/03 not to employ a remuneration committee to decide directors' remuneration. Mr Brown said that he did not believe for a minute that this was the case. However, the shareholder said that his research indicated that this was the case. Mr Brown indicated that the directors' fees were determined by a sub-committee of the board with no director being allowed to determine his own remuneration. During the debate that followed Mr Brown denied that the West Ham board was one of the country's better paid boards and produced salary figures for a number of football administrators in defence of his claim (although it should be said that this list did also include non-club administrators such as the FA's Richard Scudamore and the PFA Chairman Gordon Taylor). Mr Brown pointed out that he had been re-elected at the previous year's AGM with over 98% of the vote, even if votes from the board and associated persons were discounted and that if the shareholders were dissatisfied with him they should vote for his dismissal. Another shareholder later pointed out that in previous years the initial voting at AGMs had been taken on a show of hands and that the club had dispensed with this option for this year. An impromptu show of hands suggested that a majority of those present (if not in terms of numbers of shares held) would support moves to remove Mr Brown.
Mr Brown was then questioned about the suggestion that he had taken a pay-rise of some 25% at a time when the team was bottom of the Premiership. Mr Brown dismissed this suggestion as a myth that had been circulated by the websites. Mr Igoe suggested that an increase of 15-16% had been paid at a time when the team had finished 7th in the Premiership.
In response to further questioning, Mr Brown agreed that, other than the initial cost of his shares, he had not invested any further money into the club. However, he denied that he had received his initial investment of approximately £2.5m back in the form of salary, pointing out that he had had to forgo a significant amount of interest that he would have been able to receive from investing that amount elsewhere. However, Mr Brown refused to confirm that he would be willing to share his shares to a “fairy godmother” for a similar amount originally invested plus an appropriate amount of interest. Mr Brown referred to a shareholder – Colin Scriven- who had said at the time of the last AGM that replacing Mr Brown would be easy now that he had agreed to go. Despite this no bids had been received. Mr Scriven agreed that obtaining a replacement for Mr Brown had been more difficult than he had envisaged at the time. Mr Brown said that he had only ever received one bid for the club, from Michael Tabor. Mr Tabor had bid £5m for a 51% stake in the club that, at the time, had been valued at £60m. Barrie Abrahams, a WHISTLE Group member, commented that the group had already received pledges that would cover a rights issue of shares of £20m.
Quizzed as to whether the pay deferment taken by directors earlier in the year would be reinstated, Mr Brown declined to comment specifically, although he stated that shareholders “would not be disappointed”.
Part of the way through the meeting, a shareholder took the stand to express his opinion that, given his experience as a shareholder in several football clubs and as a businessman, Mr Brown and his board were doing an excellent job in running the club, although rightly or wrongly this view was greeted by many of those present with derision.
In response to further questioning from Mr Abrahams, Mr Brown repeated his claim that he had had no approaches from anyone to buy his shares. The questioner pointed out that he had himself contacted Mr Brown on two occasions Mr Igoe said that the board had considered Mr Abrahams' query to be an attempt to ascertain Mr Brown's selling price rather than a firm offer for the purchase of shares. Mr Igoe also suggested that Mr Abrahams' motives might have been “mischievous”, bearing in mind that, within an hour of his recent visit to the club to examine directors' contracts, details of those contracts had appeared on websites. Both Mr Abrahams and the colleague who accompanied him on the visit denied being responsible for the leak.
Mr Igoe was questioned about the motion passed at the EGM earlier in the year to amend the club's Articles Of Association to remove the assets-based cap on borrowings. Mr Igoe confirmed that, although the club was not in breach of its Articles at the time of the EGM , the borrowings cap would have been breached had the Articles not been amended. Mr Brown confirmed that the club had been faced with two options, either to amend the Articles or to have the assets revalued. Mr Brown said that the club had chosen the former option as a revaluation of the assets would have cost £30,000 in fees to arrange.
One shareholder referred to comments made by the Chairman in a letter to a fan that it had been “West Ham's turn” to suffer relegation, saying that he had checked with the FA and that no rota system had been introduced. Mr Brown expressed his annoyance that, having taken the time to respond to supporters, a comment had been taken in isolation and exposed to ridicule. Mr Brown described the shareholder as a “half-baked comedian” and said that, despite the controversy his comments had caused, he would continue to reply to supporters' queries. Mr Brown admitted that, in retrospect, he might have phrased his comments better and also apologized to the shareholder for any offence his “comedian” comment may have caused.
Mr Brown was then questioned as to the purpose of a consultancy fee of over £60,000 shown as paid to Chris Manhire. Mr Brown said that the fee had been paid in respect of advice given concerning the construction of the new West Stand (as I still call it!). The constructors had made a loss of £3m on the construction of the stand, mainly as a result o the contract's requirement for the delivery of a licensed stand.
M Brown moved the meeting on to consider the reappointment of Messrs Aldridge and Warner. Several shareholders queried Mr Aldridge's background and qualifications with regard to running a football club, especially in view of the fact that he was responsible for the negotiation of players' contracts. Several shareholders praised Mr Aldridge for his professionalism in his dealings with them.
During this period of the meeting there was a general discussion regarding player contracts. Mr Brown mentioned that, although Rio Ferdinand had signed a 7 year deal, it had been decided that it would be better for the player to move away from London although Mr Brown refused to be drawn on why this should have been the case. Mr brown also referred to Jermain Defoe saying that at one point the player would have happy to just play football “even on Hackney Marshes”. Mr Brown added that “as we all know he's not right in the head” and that the player “has 18 months left on his contract. He won't be at the club at the end of that period and there is nothing you or I can do about that”.
Mr Warner was queried as to his role as a non-executive director. Mr Warner and Mr Brown defended Mr Warner's record of independence as a director. Mr Abrahams expressed his opinion that Mr Warner misled shareholders in stating that he had had no official approach from the WHISTLE group since he himself had written to Mr Warner regarding his shareholding. Mr Warner said that it had not been clear to him that the query had come from WHISTLE, whilst Mr Brown accused WHISTLE of being “pedantic” over this particular point.
The agenda proposals were then put to the vote, although with the board holding shares or proxy votes of over 14m shares in favour of each proposal the votes were quite literally a foregone conclusion.
As mentioned, I have tried to summarise the proceedings as they occurred rather than to give my own views on the issues concerned. I hope I have achieved this. However should anyone – including Mr Brown and his fellow directors – feel that I have misrepresented them in any way I am more than happy to put the record straight if needs be.
I'm now off for a lie down and some paracetamol!
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