Countrywide fat cats: crunch day for agency group's rescue deal

Today sees the first of a series of important deadlines which will determine the success of otherwise of Countrywide’s controversial rescue plan.

However, it comes in the midst of a shareholder revolt over the pay of the troubled agency group’s senior management.

Sky News’ respected City editor, Mark Kleinman, says the row revolves around an alleged £20m which could go to Countrywide’s three most senior bosses.

Last evening two prominent Countrywide employees contacted Estate Agent Today editor Graham Norwood: both wanted to remain anonymous but one described the deal, if true, as “immoral” and the other called it “the straw that broke the camel’s back in terms of any loyalty left to the people who got the company into its current mess.”

The revolt is particularly humiliating for Countrywide’s executive chairman Peter Long, who in July summarily ignored a similar pay revolt in another company he chairs - Royal Mail.

Sky News says “leading City institutions” are planning to oppose a new incentive scheme for senior management that Countrywide wants as part of its £140m rescue fundraising, unveiled early this month. 

Applications to invest in the proposals put forward by management must be received by 11am this morning, with the result being announced on Tuesday.

Last month Countrywide - in the same announcement as it admitted a massive 61.5 per cent fall in half-year earnings - set out details for its 'Strategy and Turnaround plan.'

This involved a placing and open offer within a broader capital refinancing plan, in a bid to raise £140m “which aims to strengthen the balance sheet, reduce leverage and enable the group's turnaround.” The plan also includes an amended four year revolving credit facility.

If the call is successful, the new shares will begin dealing on the London Stock Exchange on August 30.

The full Sky News story about the shareholder revolt is below.

Peter Long, chairman of the ailing estate agent Countrywide, is facing the humiliation of a second massive shareholder revolt in as many months over a pay row which could hand its top three executives more than £20m.

Sky News has learnt that leading City institutions are planning to oppose a new incentive scheme that Countrywide wants to push through as part of a £140m rescue fundraising to keep the company afloat.

Mr Long, whose role has changed to an executive position following his decision to sack the company's former chief executive, could receive stock worth well over £6m under Countrywide's new Absolute Growth Plan (AGP).

The two other board executives - Paul Creffield, the new group managing director, and chief financial officer Himanshu Raja - could receive shares valued at more than £8m and £7m respectively.

Countrywide's proposals to replace its existing long-term incentive plan with the AGP has provoked a furious response ahead of the meeting to approve the capital-raising and pay arrangements on 28 August.

A number of big shareholders have vowed to vote against the plans, although they are not hopeful of blocking them because Oaktree, a private equity group which owns 30% of Countrywide's shares, is expected to support them.

The revised remuneration packages have stoked particular anger because Mr Long also chairs Royal Mail Group, which saw more than 70% of shareholders rebelling against its remuneration report last month - one of the largest-ever such protest votes.

Mr Long himself also saw roughly one-third of Royal Mail investors voting against his re-election at its annual meeting.

The strength of City feeling against him was partly a reflection of concerns that he was culpable of "overboarding", the term for a director holding too many roles to be able to perform competently in them.

Mr Long has since stepped down from one of his non-executive directorships.

Nevertheless, a sizeable revolt against Countrywide's new incentive plans would potentially have damaging long-term consequences for Mr Long's reputation among key investors.

In a report seen by Sky News, Institutional Shareholder Services, an influential adviser on voting decisions, said the estate agent's investors should oppose its new remuneration policy and the implementation of the AGP.

ISS labelled the scheme as "excessive" and "unduly complex", and warned that the "calculation of awards is not specified".

"No compelling explanation has been provided as to why the proposed arrangement is essential to effectively implementing the group's strategy and turnaround plan," ISS said.

The IVIS service operated under the auspices of the Investment Association has also alerted City institutions to details of Countrywide's plans.

According to sources who have seen its report, it has "red-topped" the company's EGM in relation to changes to shareholder voting rights, while it has given an "'amber top" to the remuneration proposals.

"Given this is a new plan, shareholders will need to be comfortable over its structure and the timing of the proposal in the context of the capital- raising," said one insider familiar with the IVIS report.

According to documents circulated by Countrywide ahead of the meeting, the AGP would only pay out above a series of specific benchmarks relating to the overall value of the company.

Up to 15 executives will participate in the new framework, with no individual receiving shares worth more than 15% of the overall value of the incentive pot.

However, one shareholder who has said he will vote against the proposals, pointed on Thursday to the fact that existing investors had effectively seen their holdings wiped out by the rescue refinancing.

Countrywide, which was trading up 1% at 14.6p on Thursday afternoon, has a market value of just £75.7m.

The company's plans come at a time of continued sensitivity on the issue of executive pay.

A report by the CIPD published this week said that the median pay of FTSE 100 chief executives rose by 11% last year to £3.93m.