AIM directors ruffle shareholder feathers with exec pay shenanigans
It’s not just Tesla awarding eye-watering pay to execs. Even the bosses of the smallest of small caps are finding novel ways to boost their remuneration.
That appears to be the case for the directors of AIM-listed property company DCI Advisors.
In October 2023, DCI proposed an incentive plan which, by the calculations of the firm’s largest (and unhappiest) shareholder, Almitas Capital, could have paid the directors as much as €7m (£6.1m), equivalent to about a seventh of the entire market cap of the £40m firm.
To put that in perspective, the lavish pay packet was equivalent to over three times the largest director incentive fee paid out on any comparable UK investment fund, according to research by Almitas.
After overwhelming negative reaction from shareholders, the plan was withdrawn.
So in March 2024, the board added an extra €100k to the directors’ salaries (there was no vote) and in November, brought forward a new incentive proposal, which (per Almitas) would only have earned them a modest €4m.
This was voted down.
“Fiasco”
While DCI’s management has been trying to boost its pay packet, shareholders have accused the company of running a “fiasco.”
“When it comes to the quality of the operations, I’m amazed by some of the things they’ve done,” said Peter Gyllenhammer, a Swedish investor who owns 7.7 per cent of the company.
The biggest “fiasco”, as Gyllenhammer put it, came a year ago when DCI announced it had entered into an agreement to sell land on a Croatian island known as Livka Bay in a €22m deal.
“The directors are pleased to be able to demonstrate that their asset disposal plans are now producing results,” DCI trumpeted.
“When we looked into the buyer, we found out – just by doing simple Google searches – that there were developments claiming to be their own that actually were on other people’s websites that belonged to other people,” said Ron Mass, managing partner of California-based Almitas Capital.
“When we called those firms, they said they’d never heard of this buyer, they’d never heard of the company.
“Well, now it’s over one year later. There’s been no deposit, no binding commitment, no nothing – and since then they pulled down the website.”
I’ll call you back
To make matters worse, DCI had to suspend its shares last year after a delay to the publication of its accounts, and there are questions over its board appointments, as well as its idiosyncratic definition of who qualifies as an independent or non-independent board member.
Growing increasingly frustrated, Almitas, which controls a 20 per cent stake, last year called for an extraordinary general meeting. DCI agreed to set one up but has since postponed it – five times in a row.
“We just think this is one of the most egregious examples of corporate governance failures – and there’s really not much we can do about it if the board refuses to hold meetings,” Mass said.
The meeting may finally happen next week – and it looks like there’ll be fireworks.
DCI Advisors did not respond to a request for comment.