Two very different companies are engaged in two very different battles at the moment. Keith Miller, the chief executive of Miller Group, is struggling to keep his company private. Erinaceous is fighting for bare survival. Yet could the shareholders of each learn from the plight of the other?
The management of Miller Group is being undermined by its owners 鈥� including Keith Miller鈥檚 cousin James 鈥� who say the internal mechanism set up (by James) to allow them to trade shares with other owners is not transparent (pages 17 and 30-32). In reality, the rebels, most of whom have contributed neither cash nor sweat to the success of an outstanding company, believe they could make more by selling all their shares, and with them overall control of the company, on the open market. Perhaps they鈥檙e right. Although bearing in mind that housebuilding shares are presently being slaughtered in that open market, that view might be severely tested.
Miller runs the company as a quasi-public concern. In addition to annual shareholder presentations, a third of the group鈥檚 board is made up of
non-executive directors. Many shares traded within the firm are owned by about 280 employees, enabling them to share in the wealth they create. The result of this is that last year the 75 rebel shareholders split a 拢7m dividend.
Contrast that with the (admittedly rather extreme) example of Erinaceous. The company is publicly owned, so has to comply with all kinds of legal obligations. It is required to employ non-executive directors, who act as the custodians of corporate governance. And Erinaceous had top drawer non-execs. Non-executive, later executive, chairman Nigel Turnbull actually wrote the 1999 Turnbull Report on corporate governance, described at the time as 鈥渁 beacon to non-executive directors鈥�. Others included Lord Razzall, a Liberal Democrat peer, Lord Poole, a former adviser to John Major, and Nicholas Fry, a partner in KPMG. And the result? Erinaceous was raided by the Serious Fraud Office, breached its banking covenants and ended up 拢168m in debt.
Turnbull鈥檚 beacon does not appear to have illuminated much for Erinaceous鈥� custodians of corporate governance, although they still managed to grope in the darkness for more than 拢200,000 in salaries last year. They also
rubber-stamped the 拢736,000 pay-off to chief executive Neil Bellis and Lucy Cummings, his sister-in-law. So almost 拢1m of shareholders鈥� money, about 6% of the company鈥檚 market value, was spent 鈥� and on what, exactly?
Miller鈥檚 structure may be messy, but it鈥檚 not half as messy as a badly run, badly supervised public company. Bearing in mind the manner in which Erinaceous鈥� woes came to light, it鈥檚 hard to argue that a firm like Miller Group is less transparent than a public company, or that Keith Miller is wrong to be so determined to keep the firm in private hands. And good luck to him. Meanwhile, Miller鈥檚 rebel shareholders ought to be careful what they wish for.
Denise Chevin, editor
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