SIR FRANCIS MACKAY, the outgoing chairman of Compass Group, was given a frosty send-off by shareholders at the annual meeting yesterday after what he admitted had been “a torrid year” for the caterer.
Investors used the meeting at the Queen Elizabeth II Conference Centre in Westminster as a chance to attack the performance of Sir Francis and Mike Bailey, the departing chief executive, in a year featuring three profit warnings and a United Nations investigation into possible fraud.
As Sir Francis introduced the meeting by declaring it would be his last as chairman after 20 years with the company, only one shareholder in the brimming auditorium broke into applause, prompting Sir Francis to declare ironically: “Thank you very much, madam.”
One small shareholder criticised the “dismal performance” of Compass since its demerger from Granada five years ago, since when the share price had halved.
He asked when the company, which he accused of being “corrupt and inept”, would get “a competent chairman and chief executive”.
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Another investor, noting that Sir Francis had voluntarily waived a bonus entitlement, suggested that he should be “truly magnanimous” and give up some of his £16 million pension pot to reduce the company’s employee pension deficit. “How about it, Sir Francis? Are you going to be a trendsetter?” The chairman dismissed the suggestion, arguing that the value of his pension pot was a notional one arrived at by actuaries, based on his estimated lifespan. “If I die at the same time as my beloved parents, which I hope I don’t, then the capital value would be halved,” he said.
One member of the United Kingdom Shareholders’ Association, which looks after the interests of private shareholders, said: “This is a company with a turnover of £12.7 billion and profits after tax of a paltry £1 million. You don’t seem to have got this company together at all.”
Sir Francis admitted that 2005 had been “the most difficult year since the Compass IPO (initial public offering) in 1988”, but he insisted that current trading was in line with market expectations. Despite fears about the impact of the UN investigation into contract irregularities, he said it was “seeing good success in new contract wins”.
He played down the possibility that Compass might be fined by US authorities over the UN contracts, although he admitted that the group’s own internal investigation had found irregularities in “most” of the seven UN contracts it has, in countries including Liberia, Sudan and Eritrea.
Sir Roy Gardner, who is due to take over as chairman by the summer, was asked about reports that the new chief executive could earn as much as £5 million a year if all performance targets are met. The Centrica chief executive bridled at the question, insisting it was “wide of the mark” and that the package would be “nothing like that”.
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He said that he was confident that he would be able to announce the identity of the new chief executive by the end of next month, adding: “We have four very good candidates.”
Mr Bailey said the £1 billion auction of Select Service Partner (SSP), the group’s travel concessions business, was also progressing smoothly, and it expected to whittle down the shortlist to “two or three” parties next week.
He confirmed that Autogrill, the Italian caterer, was the only remaining trade bidder after the withdrawal of Whitbread and France’s Elior, but added: “Whether they get through to the next round we’ll find out in a few days.”
Chief left untainted by ‘annus horribilis’
COMPASS GROUP’S annus horribilis, as one shareholder at yesterday’s annual meeting called it, appears to have done little lasting harm to the reputation of Mike Bailey, the company’s outgoing chief executive.
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Mr Bailey, 57, who has been with the world’s biggest contract caterer for 13 years, the last seven of which were as chief executive, said after the meeting: “I’ve had quite a few approaches about non-exec positions.”
Although no replacement has been announced, he was hopeful that he would be able to leave the company by summer and was planning a holiday in Australia. “I’m going to take some time off and do some of the things with the kids I’ve promised to do a thousand times and had to pull out of due to work,” he said.
His two children are American citizens, a legacy of Mr Bailey’s time as head of the company’s US division in the 1990s. He said that it was quite likely he would settle in the United States, where he also met his second wife.
Sir Francis Mackay, the Compass chairman, who is also stepping down, used the annual meeting to pay tribute to his colleague’s contribution in building its US business and taking it into Japan and several other countries. “He had a torrid time last year but I’d like to thank him for everything he’s done for the group,” he said.