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

Announcement posted by Advocate Strategic Investments Pty Ltd 13 Oct 2016

VOTE NO AGAINST EXCESSIVE, UNACCOUNTABLE AND SHAREHOLDER DESTRUCTIVE REMUNERATION POLICIES


Circular to Shareholders of Pacific Current Group Limited (ASX:PAC) To vote no AGAINST

Adoption of 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 Group 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.

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 Company's 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). See link to the confusing Trust Accounts http://paccurrent.com/wp-content/uploads/2016/10/30-June-2016-Trust-FS-Final-signed.pdf

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 in the Company’s share price collapse, of more than 60%. (See Reuters chart via link below, dated 10 October 2016.)

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 as disclosed in the Company's annual report (see link) to:

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

Tim Carver, CEO, who received $2,209,847 – which included an unsubstantiated 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.

It's an absolute disgrace and a mockery to Good Governance

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 link to 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

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

Forensic financial investigation into PAC’s questionable merger with Northern Lights (the assets and liabilities packaged up by William Blair)

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.

If you have already voted you can amend your vote online through Computershare. See link to notice of meeting and voting form which contains the Computershare contact details. http://paccurrent.com/wp-content/uploads/2016/09/2016-ANNUAL-GENERAL-MEETING-AND-RETIREMENT-OF-DIRECTORS.pdf  

Yours faithfully,

Michael de Tocqueville

Chief Investment Officer

AFSL Responsible Manager 224560 

Pacific Current Group Limited Shareholder


DISCLAIMER

ASI is also 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 restore 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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