14 May 2012

Auto retail groups rarely hit the front pages of national newspapers and, when they do, it’s usually for the wrong reasons.

We imagine the fact that The Times headlined its business section on Friday with the Pendragon shareholders’ revolt will not have gone down well in Loxley House, the company’s headquarters. This is not the kind of coverage that Trevor Finn and his fellow directors would have had in mind following the AGM and a relatively bullish trading statement on first quarter sales.

Inevitably the vote is being linked to the so-called ‘shareholder spring’, during which investors across a whole range of industries are flexing their collective muscle and voting down over-generous remuneration schemes. Company bosses such as Andrew Moss of Aviva and Sly Bailey of Trinity Mirror have been forced to resign over pay deals.

Pendragon has long been something of an enigma. Much admired in the City, it tends to provoke a mixed response from business rivals who claim it has consistently failed to deliver on its promises and, operationally, it is poor.

Shareholders, of course, don’t worry about such matters so long as their investment continues to grow and they can see a clear strategy ahead – that’s why they put their money in the first place.

In truth, the upset over pay and bonuses at Pendragon may turn out to be something of a sideshow. More significant is the fact that 14% of shareholders voted against Mr Finn being re-elected as a director and 26% voted against chairman, Mike Davies.

Ultimately though shareholders have nothing to gain by forcing Mr Finn to quit and Pendragon has been much closer to collapse than this in recent years, when its share price dipped to 1.4p in 2008. So we don’t see Finn following Moss or Bailey out the door.

The truth is: shareholders need Pendragon to survive, car manufacturers need Pendragon to survive and other listed auto retail groups need Pendragon to survive. Put simply: turkeys don’t vote for Christmas.

Rupert Saunders

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Tags: Christmas, executive pay, Pendragon, share holders, Trevor Finn, turkeys