Property investment group Conygar is expected to face tough questioning at its annual meeting on Thursday over executive bonus payments.
According to private shareholder group ShareSoc, the Aim-listed company paid a total of £12.8m to its directors in salaries and bonuses over the past five years, with the main element being bonuses. The executive scheme is designed to pay out 20% of any increase in net asset value, prompting shareholders to question how last year's bonus of £2.7m was calculated. ShareSoc said they were told the figure on which the bonus was based included £1.2m from share buybacks. ShareSoc said:
How does a share buy-back generate a profit (or improvement in net asset value)? Any cash on the balance sheet that is used to purchase shares should surely be treated as an adjustment to the capital so far as the bonus calculations are concerned?
ShareSoc advised voting against the remuneration report at this afternoon's meeting (see page 72 of annual report). Apparently large shareholders such as Aviva and Gartmore may also attend.
Meanwhile Conygar's have moved 1.5p higher to 97.5p after four of the company's directors added to their shareholdings by buying 1m shares between them at 96p each.
Update:
A spokesman for Conygar has responded about the buyback issue:
Conygar met with David Stredder from ShareSoc in the middle of December and explained that the effect of the share buy back, although very beneficial to shareholders, has been excluded from the bonus calculation, and matters relating to the conversion of the preference shares have also been excluded.
