Sunday 25 March 2018

INM chairman's fate was sealed as far back as April

With O'Brien's 29.9pc stake and Desmond as kingmaker, AGM vote was set, writes Nick Webb, Business Editor

INM Chairman James Osborne's fate was sealed back in April at a dramatic meeting of the listed newspaper and media group's board. The final blow was delivered at INM's annual shareholder meeting in the Citywest Hotel last Friday.

Tensions between the two largest shareholders, billionaire Denis O'Brien and the O'Reilly family, which had controlled the Indo since the early Seventies, had simmered for five years, with intermittent rises in temperature.

Shares had fallen heavily as Ireland faced the worst recession in living memory.

Gavin O'Reilly, the INM chief executive since 2009 and former chief operating officer, had resigned and was awarded a €1.87m payment on his departure.

The board split over this payment, with Paul Connolly -- one of Denis O'Brien's representatives on the board -- bringing the issue to the High Court.

This legal action prompted Osborne to call for Connolly to resign. When he refused, Osborne announced that he would recommend that shareholders vote against his re-election.

But the numbers were never going to stack up in Osborne's favour. Denis O'Brien had been buying shares and had built up a 29.9 per cent stake. On average less than 70 per cent of shareholders vote at AGMs, which meant that O'Brien effectively held about 43 per cent of the votes.

IFSC-based financier Dermot Desmond was also buying shares and had built up nearly 6.4 per cent of the company. Desmond was now the kingmaker, depending on which way he voted.

Early noises coming from market sources suggested that Desmond would vote against Osborne and certain other directors. When Desmond's representative John Bateson stood up to make a brief statement, Osborne knew he was exit-bound. Desmond's man indicated his support for Connolly and that the vote would be going against the chairman.

But Osborne wasn't the only board member heading for the exit. In the run-up to the AGM, three other board members announced they would be stepping down and not seeking re-election to the board.

Baroness Margaret Jay, Lothar Lanz and Bengt Braun all indicated that they would be leaving. Chief Finance Officer Donal Buggy was also up for re-election. O'Brien and Desmond opposed him.

But while there were high-profile casualties, there were also ringing endorsements of other board members facing the vote. Connolly was re-elected with plenty to spare, as was new Chief Executive Vincent Crowley. Lucy Gaffney, Frank Murray and David Reid Scott were all emphatically re-elected by shareholders.

Denis O'Brien had "total confidence" in INM Chief Executive Vincent Crowley -- who replaced Gavin O'Reilly in April -- according to his representative. Connolly added that he looked forward "to supporting the new chief executive and his management team in creating a new and stronger INM".

A full poll of voters was required rather than a mere show of hands. A ballot box was set up at the rear of the conference room and shareholders queued to cast their vote before falling on smoked salmon canapes. The votes were counted and the result announced to the stock exchange at 4.45pm. It was just a procedural exercise as the combined votes of O'Brien and Desmond had already sealed the deal.

The remaining INM directors, Vincent Crowley, Frank Murray, Paul Connolly, David Reid Scott and Lucy Gaffney, held a board meeting after the extraordinary events of the day.

Further board meetings will be held early this week with the appointment of a new chairman top of the list. The board will also need to be reconstituted with another two or three independent directors brought on.

The future influence of the major shareholders on the direction of INM is of pivotal interest to observers.

"I'm an independent chief executive and will operate as such. That's the reality," Crowley told the Sunday Independent.

"Denis O'Brien is a shareholder, so is Tony O'Reilly and so is Dermot Desmond. We will listen to all our shareholders."

Sunday Independent

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