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Pacific Current Group Limited (ASX:PAC) - Shareholders Are Urged To Vote Against Excessive Remuneration Payments

Announcement posted by Advocate Strategic Investments Pty Ltd 23 Oct 2016

Shareholders should express their dissatisfaction at the AGM by voting no “against” the adoption of the remuneration report

Circular to Shareholders of Pacific Current Group Limited (ASX:PAC)


To vote no AGAINST the proposed adoption of Resolution 2.

The Remuneration Report

at the annual meeting (AGM) of Pacific Current Group 

to be held

Thursday, 27 October 2016

commencing at 10:00am at the offices of

Herbert Smith Freehills, Level 42, 101 Collins Street Melbourne.


Dear Fellow shareholder 

Enclosed within this letter you will find information that will put you in a better position to vote on resolutions being put forward for your approval at the AGM. 

The AGM provides an opportunity for the Company’s shareholders (“Shareholders”) to communicate with the directors and I sincerely hope you will take such opportunity. 

Should you be unable to attend the meeting in person, I strongly encourage you to exercise your right to vote by appointing a proxy. The ordinary business of the AGM includes the consideration of the 2016 Annual Report and Financial Statements, the appointment of auditors and approval of their fees, the appointment of directors, approval of dividend and approval of aggregate emoluments of directors. 

ASI REPRESENTS LONG-STANDING PACIFIC CURRENT GROUP SHAREHOLDERS 

The financial performance of Pacific Current Group since its questionable merger with Northern Lights has been nothing short of a financial debacle for the company’s long-term shareholders. 

We believe that Pacific Current needs to change. 

Shareholders should express their dissatisfaction at the AGM by voting no “against” the adoption of the remuneration report. 

If 25% of eligible voters (i.e. excluding directors and key management personnel) vote “AGAINST”, there would be a “First Strike,” meaning the next Remuneration Report must explain whether shareholders’ concerns have been taken into account, leading to the possibility of a spill resolution after that. 

This document should be read in its entirety. If after reading this Circular to Shareholders, you have any questions or doubts as to how you should vote, you should contact your stockbroker, solicitor, accountant or professional adviser. 

BACKGROUND 

We urge Shareholders to vote against the absurd Pacific Current Group Limited remuneration report, to be considered and voted on at the 2016 Annual General Meeting of Members. 

Shareholders have seen $288 million of their hard-earned equity transferred into a questionable Managed Investment Trust, only to see nigh on half of those same funds written off in less than two years. 

The Aurora Trust’s losses as per its financial statements as at 30 June 2016, stand at more than $140 million dollars! (you only need read page 9, of the Aurora Trust Consolidated Financial Statements 2016 to get the ugly news). 

The Trustees of the Trust have the fiduciary obligation to protect, grow and preserve the Trust’s assets – not oversee their destruction. 

In addition to the financial losses attributable to the board’s unsatisfactory stewardship in the same two-year period, shareholders have suffered capital losses, as seen by, the Company’s share price collapse of more than 60%.

(See link to the REUTERS chart below, dated 10 October 2016 and select the 3-year chart.) 

http://www.reuters.com/finance/stocks/chart?symbol=PAC.AX 

Both of these aspects of performance of Pacific Current Limited are extremely alarming to shareholders. Despite this damning indictment a board and executive group made up of the entrenched and their hand- picked supporters is now asking shareholders to reward the Board and key management personnel (KMP) by supporting increases in remuneration.

Shareholders have a right to be concerned about the Company’s future under current KMP and Board. 

The enormity of losses being experienced by the Company is also reflected in the slashing by 80% of the final dividend to shareholders. 

However, in the same period, we saw a massive increase in obscene remuneration payments, devoid of any sensible basis of performance indicators or accountability. 

Payments and grants made over the financial years 2015 and 2016 (in 2 years), as disclosed in the Company’s annual report, to:

http://paccurrent.com/wp-content/uploads/2016/09/Annual-Report-2016.pdf 

Tim Carver, CEO, who received $2,209,847 – which included a cash payment of $824,421

Paul Greenwood, the CIO, who received $2,542,631

Joe Ferragina, the finance director and COO, who was paid $1,479,462

Andrew McGill, the MD (since retired), who received $765,000

These manifestly excessive payments were followed up by the non-executive directors having their salaries increased by a massive 42%, in the same disastrous period covering financial years 2015 and 2016. 

ASI contends that the current Board of Pacific Current Limited should not be entrusted with rewards sought by insiders under the Company’s remuneration policy. 

ASI believes that shareholders need to be in a position to reclaim performance-linked remuneration elements that were paid to (or vested on) executives on the basis of the losses suffered and cited herein. 

We also strongly support mechanisms to facilitate the recovery of amounts paid to executives based on financial statements subsequently found to be materially misleading, as being in the best interests of shareholders. 

It is appropriate commercial practice for a company to negotiate such an outcome and reflects good corporate governance. 

The Pacific Current share price chart above tells the story more plainly, and from the perspective of shareholders, more poignantly.

ISSUES REQUIRING URGENT ATTENTION AND A FULL GOVERNANCE REVIEW 

The removal of entrenched and preferentially appointed Directors and executives, who have presided over PAC’s financial destruction.

A Governance investigation into the excessive and unaccountable remuneration and level of fees paid to the Board, the Executive Directors, other executives who remain unknown, accountants, auditors, legal and corporate advisers.

A Forensic financial investigation into PAC’s questionable merger with Northern Lights (the assets and liabilities packaged up by William Blair). https://www.williamblair.com/sitecore/content/News-Items/2014/November/25/William-Blair-Advises-Northern-Lights.aspx 

A wide-ranging Strategic and Enterprise risk management review to enable execution and restoration of shareholder value

The employment of an Australian based, strategically risk-focused Board and Management team armed with a “Return Driven Strategy” to grow the Company for the benefit of all shareholders. 

“The people who presided over the destruction of shareholder value are not necessarily the ones qualified enough to restore value.” PAC Shareholder 

SUMMARY

Pacific Current Group Limited has lost tens of millions of shareholder funds invested through its suspect merger with Northern Lights. 

Pacific Current over rewards its board and executives in a way which is manifestly devoid of accountability. 

It is time for a change at Pacific Current Limited – voting “no” “against” the Remuneration report is the first step in shareholders reclaiming control over the performance of their company. 

A vote "against" the adoption of the remuneration report is the most effective way to communicate your dissatisfaction as to the current and on-going performance of the company and its questionable governance. 

We respectfully ask that you carefully consider your position, and if you agree with our concerns or have other concerns, please vote against the remuneration report.

Yours faithfully,

Michael de Tocqueville

Chief Investment Officer

AFSL Responsible Manager 224560

Pacific Current Group Limited Shareholder

DISCLAIMER

ASI is the manager of the Advocate Partners portfolio which holds Pacific Current Group Limited shares. As a Constructivist investor, Advocate Partners seeks and attempts to construct a more efficient company through effective engagement or suggest ways to collegiately build or rebuild shareholder value.

This Press Release has been prepared by Advocate Strategic Investments Pty Ltd ABN 77 101 691 598 | AFSL 224560 (ASI) for the information of shareholders. This release has been prepared from information available to ASI on the date of release and from publicly available sources. ASI has not verified this information and no responsibility is accepted for the accuracy, currency or completeness of this information. This release must not be taken to be financial product advice in respect of shares in the Company.

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