The Premier Foods chief executive, Gavin Darby, said he would stay on as the head of the Mr Kipling owner despite facing a 41% protest vote against his re-election by shareholders.
Speaking after a stormy annual general meeting where the activist shareholder Oasis Management called on Darby to step down regardless of the outcome of the vote, the chairman, Keith Hamill, said Premier’s board backed the chief executive and that decision had been accepted by a majority of shareholders.
Hamill said it would be wrong to ignore the views of nearly 60% of investors to back Darby. “We intend to continue to listen and have discussions with shareholders, including those whose support we don’t have,” he said.
Oasis, which last week temporarily doubled its stake in the company to 17.3% after borrowing shares from other investors, accuses Darby, a former Coca-Cola and Vodafone executive, of “persistent value destruction” during his five-year tenure. It claims Premier is in a “zombie-like state” because of his failure to drive growth.
Paulson & Co, which controls a 6% stake in Premier, has sided with Oasis but the top shareholder, Nissin Foods, which owns a 20% stake, backed Darby.
At the meeting, Premier’s board came under fire over executive pay, the way it had accounted for its debts, and the failure to raise its share price above a putative bid of 65p a share from the US firm McCormick in 2016.
About a quarter of proxy votes were also posted against the re-election of nearly all Premier’s directors, and its remuneration report.
Oasis criticised the board for a sudden “change of posture” after Hamill and Darby made clear in comments to the media just ahead of the meeting that the company would be happy to consider offers for all or part of the company.
Hamill told shareholders there had been no change in strategy. “The primary strategy of the company is to improve performance and reduce debt but the board has also said that in parallel with that we will be looking at ways to see if it’s possible to release some of the financial pressure,” he said.
However, he added: “We are not in the business of selling things we can grow without getting good value for them.”
A spokesperson for Oasis said: “A majority of Premier Foods’ top independent public equity shareholders have voted against the re-election of Gavin Darby.
“He has been saved by what we consider to be his cosy relationship with conflicted shareholder Nissin Foods, reminiscent of what happened in 2016 with the McCormick takeover approach.
“The message from today’s huge negative vote could not be clearer – Gavin Darby has no credibility and he should step down immediately. If he is unwilling to resign, we urge the other directors to discharge their duties and act in the best interests of the shareholders as a whole to remove him.”
At a bad-tempered meeting that journalists were allowed to watch only via a live feed from an adjoining room, Oasis’s criticisms of Darby were taken up by a former non-executive director of Premier Foods.
Charles Miller Smith, a former Unilever executive who stepped down from Premier’s board in 2015, said he had helped appoint Darby but now believed “it’s time to bow out” as Darby lacked “leadership skills” and “any sense of strategic change”.
Premier’s former chair David Beever, who left last November, defended Darby, saying he was “probably the best chief executive I have ever worked with”.
“Legitimate frustration is no excuse for sloppy analysis, for bad judgment and flawed proposals,” he said.
Beever told the meeting how a putative 65p a share bid from McCormick, the US flavourings firm, in 2016 had never been firmed up.
He said that after checking over Premier’s books, the chairman of the Schwartz herbs and spices owner told him there would be no bid “at any price” because of a regulatory issue with the group’s pension scheme. “The criticism of Gavin Darby for walking away from a bid is completely wrong,” Beever said.
