Richard Curran: 'Has Glanbia bitten off more than it can chew with CEO pay rise?'
The 6pc fall in Glanbia's share price during the week coincided with news that more than a fifth of shareholders had voted against the new remuneration package for chief executive Siobhan Talbot and finance director Mark Garvey.
Talbot is in line for a 22pc pay rise under a three-year multimillion euro remuneration package. Tempting and all as it is to link the share price fall with the vote against the pay hike, things don't really work that way in the market.
Glanbia said after its annual general meeting that it "noted" the vote against the remuneration package but I'll bet it more than just "noted" the share price fall which was more likely triggered by market disappointment at the trading update issued.
The Kilkenny-based group has built up a solid US business with global potential in sports nutrition. It has mopped up a series of acquisitions at chunky prices which have delivered stellar growth as more health-conscious Americans buy protein bars and drink nutritional shakes.
But the first quarter trading update showed that without its latest acquisitions, mainly Slimfast, its performance nutritional division declined by 16.5pc. When Slimfast is included, the division showed constant currency revenues up 4.9pc. This was made up of a 3.4pc fall in pricing and a 16.5pc fall in volumes but a 24.8pc increase from Slimfast.
Glanbia has got in early to a growing market segment and has very strong positions in an exciting sector. The problem is that its so good, everybody wants a piece of it.
Tougher competition, price discounting and the need to constantly innovate and offer new products can take its toll. Glanbia spent $217m buying Think Thin, a US protein bar maker in 2015. In 2017 it bought Amazing Grass, a US firm that makes powder based nutrition products, and Body & Fit, an online seller of performance nutrition goods for €181m.
Its big high-profile deal last year was the €350m acquisition of Slimfast. Glanbia has continued to do well in a very competitive consumer market and Slimfast looks like being very successful for it.