Filed: Wednesday, 12th November 2003
By: Graeme Howlett
The Whistle group emerged earlier this week to announce their intention to call for the resignation of chairman Terry Brown and fellow directors Paul Aldridge and Nick Igoe at the forthcoming club AGM.
Whistle - led by long term Hammers supporter and minor shareholder Mike Hanna - revealed in a circular to shareholders earlier this week their intention to raise a motion to call for the resignation of the three directors at the club's Annual General Meeting, which is set to take place at Upton Park on December 8th.
Explaining the ethos behind the campaign to remove Brown, Hanna, speaking to the Evening Standard revealed:
"It is not personal, but for the club to move forward we need people with the capabilities, knowledge and experience to take us to a level these people are not able to. And if you look at the results over five years, the situation is getting steadily worse.
"Others should be identified and appointed, people from the leisure and service industry who have a track record of success. Our approach is that headhunters would bring in the right people to take us forward.
"The days of the chief shareholder also being the chairman are long gone. Mr.Brown has proved he is not up to the job.
"I have got on well with Mr.Aldridge over the years whenever I've spoken to him - but he must go as well. It's time for fresh blood.
"They should step aside, take redundancy and accept they can do no more for West Ham."
As previously explained on KUMB the chances of that happening are virtually impossible due to the number of shares controlled by Brown and his boardroom allies - unless Whistle could manage to lure other major shareholders toward their way of thinking. Hanna explains:
"We are confident we would be successful in an initial show of hands. But when it goes to a share count, Brown and co would vote against it and our motion would be effectively outvoted.
"If Brown doesn't fall on his sword, we would need the Hills and Cearns to outvote Mr.Brown to push it through.
"We need to convince the Hills and Cearns. We haven't contacted them directly but I was in touch with somebody who approached them in a professional manner and had discussions with them in the last two to three months. They know our position."
Hereby follows the aforementioned email which was released to shareholders earlier this week. Thanks to Whistle for allowing us to reproduce it here on KUMB:
We are a group of businessmen and professionals who are West Ham supporters and fellow shareholders and are writing to ask for your support at the company’s forthcoming Annual General Meeting (“AGM”) as we feel that the current board of directors of the company have now proven themselves unable to move this club forward.
Although the exact date of the AGM remains to be announced formally by the company as we have yet to receive the company’s accounts for the year ended 31st May 2003, we understand that it will take place at 11am on Monday 8th December 2003 at Upton Park.
The attached financial summaries show the position as at 31st May 2002, but not necessarily appreciated by the company’s shareholders let alone its directors, who undersell the implications of the actual size of the debts and liabilities that are constraining (if not overstretching or even endangering) the company.
We will update the information once we have received the 2003 accounts of the company and its peer group, which in our opinion will only confirm that the financial position of the company has worsened against its peers. If you are interested in receiving a copy please let us know by writing to the above address or emailing us at email@example.com
Furthermore, as you are aware the football club have been relegated from the Premiership. However, the 2003 accounts that we are about to receive do NOT reflect in any manner the financial effect of relegation with the concomitant reduction in income from Sky TV; sponsorship, et al.
Much has been made in the popular and financial press in recent days concerning the financial performance of Leeds United PLC and Tottenham Hotspur PLC, both of which clubs remain in the Premiership as well as Sunderland PLC who were likewise relegated with West Ham United.
In all cases, as well as there being changes in the football management there have also been changes in the board of directors who ultimately have responsibility, irrespective of the performance on the football field, for the company’s financial health.
In the case of West Ham United PLC there appears to be no such changes proposed despite the company’s financial position, being in relative terms, considerably worse than the aforementioned.
The recent alteration to the Articles of Association of the Club at the Extraordinary General Meeting, “EGM” (the removal of the rule that borrowings were limited to a maximum of three times net operating assets) was a foretaste of the ultimate effect of the failed financial strategy that had been followed by the present board.
Some would argue that the current board refuse to acknowledge the true depth of the company’s current financial position and perhaps even to mislead us. For instance, at the EGM the directors were allegedly unable to state whether the borrowing covenant had already been breached. This at the very minimum was a dereliction of their duties and quite possibly a breach of Section 221 of the Companies Act 1985, which requires the directors at all times to be able to produce accounts showing the financial position of the company.
One would have thought that the directors having convened an EGM, this financial information would have been readily available but when asked the directors were allegedly unable to state whether the borrowing covenant had already been breached.
We are therefore tabling a motion calling for the removal of the executive directors, namely Mr Terence Brown; Mr Nicholas Igoe and Mr Paul Aldridge and propose that the company instruct headhunters to identify and employ suitably qualified individuals who can be appointed to run a public company.
It is further proposed that Mr Trevor Brooking in addition to being a non-executive director of the Club is also made, with his agreement, a non-executive director of the company and that the current non-executive director Mr Charles Warner be asked to stay for a period of 12 months to allow a new board to be appointed.
The cost of providing redundancy packages to the current executive board is nothing compared to the financial losses suffered by the company under their management, let alone the effect on the football club.
You may be interested to know that in the accounts for the year ended 31st May 2002 the chairman Mr Terence Brown wrote in his report that “I do hope that in, in due course, all our supporters will understand that the need for “belt-tightening” which is taking place and realise that a priority for your board remains that of passing the club onto the next generation of stakeholders (supporters, staff and shareholders) in the best possible shape. What we cannot do is to gamble with 107 years of hard earned history in the vain hope of achieving some unprecedented success on the pitch”.
The chairman’s report was approved on 11th November 2002 yet allegedly at a board meeting of the company held on 4th December 2002 it was recorded that the company’s chairman Mr Terence Brown had been awarded a payrise in his basic salary, excluding pension and benefits to £492,000 per annum effective from 1st June 2002. The other executive directors likewise received payrises effective from 1st June 2002. This minute did not make any mention of the “paycut” subsequently announced at the EGM and which Mr Brown refers to in the latest missive alleging that the “paycut” had been agreed in December 2002.
You may also be interested to know that if the club are successful in being promoted in the 2003/04 season then the “paycut” will be reversed and the directors will receive in full the amount that they are allegedly not currently receiving since 1st June 2003.
It is in this context that the enclosed motion has been drafted and we strongly urge you to support the motion by signing the enclosed Notice of Motion and returning to the club no later than 5pm 17th November 2003 with a copy to ourselves.
We would stress that in light of our understanding of the current shareholdings of the directors of the company and club and their related/associated business and personal interests there is absolutely no chance of success of the motion being passed unless the club’s directors Mr Martin Cearns and Mr Charles Warner and/or their interests/associates and family members vote in favour of the resolution.
However, it is important that the directors are aware that we, the shareholders, are not satisfied in the way the company is being run. We strongly urge you to support the Motion by signing and returning the enclosed Notice of Motion to the company no later than 15th November 2003 and make every effort to attend the AGM to make your feelings known.
* You can download the above document including notice of motion here.
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