Activist investor Kelso has launched a stinging attack on The Works, accusing the arts and crafts retailer of improperly influencing a pivotal shareholder vote at its Annual General Meeting.
Kelso, a London-listed activist investor holding a 10 per cent stake in The Works, had been pushing to install former Card Factory executive Graeme Coulthard onto the retailer’s board.
The motion was narrowly defeated on Monday, with Coulthard’s appointment rejected by 51.6 per cent of votes cast against 48.4 per cent in favour.
John Goold, Kelso’s chief executive, has accused The Works of allowing its Employee Benefit Trust, which holds four per cent of the company’s shares, to decide the outcome of the vote.
The EBT holds shares intended to be issued as bonuses to management, and Goold claims it voted in line with The Works’ board to block Coulthard’s appointment.
Goold told City AM: “In these tight situations, they should not be voting. They definitely should not be deciding who wins.”
He added: “Anyone in the City will tell you [EBT] should not be deciding the result of a tight [vote] like this.”
A person close to The Works pushed back on the accusation, stating that the EBT is administered by an independent trustee company and that the board has no control over how it votes in shareholder motions.
Speaking at the AGM, Goold praised the retailer’s “standout performance” in recent months before expressing that he was “very disappointed” by the board’s “aggressive reaction” to his push for Coulthard’s appointment.
What “should have been a day of celebration” had instead become engulfed by a “really quite needless fallout with a major shareholder”, Goold said at the meeting.
Goold later told City AM he was “staggered” by what he described as the board’s refusal to meet with Coulthard ahead of the vote, saying: “The board did not speak to Graham ahead of this vote. They just took a view.”
During the weeks-long dispute, Kelso also accused chairman Steve Bellamy of switching his primary residence to New Zealand and dialling into crucial board meetings remotely.
Bellamy rejected those claims directly at the AGM, telling shareholders that Kelso’s accusations are “not correct” and that he has remained a dual resident in both New Zealand and the UK throughout his chairmanship.
Kelso voted to oust Bellamy as chairman, though he survived that challenge comfortably, securing 77.6 per cent of the vote in his favour.
The boardroom attendance dispute briefly turned against Kelso when a shareholder questioned why Coulthard himself had not attended the AGM, prompting Bellamy to quip: “Maybe he’s still on the 212 bus.”
Goold responded by telling City AM that Coulthard had chosen not to attend, suggesting his presence would have served little purpose given the board’s refusal to engage with him beforehand.
A spokesperson for The Works noted that the votes in favour of Coulthard’s appointment came from “a small number of shareholders”, adding: “The Board is grateful for the support of its other shareholders who voted in accordance with its recommendations.”
Ahead of the vote, The Works had warned investors that Coulthard’s presence on the board would “create unnecessary distraction [and] risk derailing” its growth strategy.