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Slater and Gordon proves the case against Slater and Gordon all by itself

Slater and Gordon has vaporised $1BN in shareholder value this year.

It is sailing very close to the wind with the qualified support of its bankers.  They now run the show, exercising their options to "help" the management understand that meeting financial covenants with the bankers is now the first duty of what used to be a law firm.  Thus the pressure to settle claims and 'get the cash in'.

So imagine the chutzpah of paying bonuses to executives against that backdrop.

The Chief Financial Officer at Slaters Bruce Houghton pocketed $100,000 for having shiny shoes and a further $87,000 for "negotiating" a financing package with the very bankers who now run the show.  In that context, negotiating means laughing at their jokes and answering "How high Sir?" to every request to jump.

Chief Operating Officer Felicity Pantelidis raked in $94K for operating badly, while the grand daddy of them all in the "I see it, but I don't believe it" stakes is the Chairman John Skippen - just on a 50% pay increase for doing what the bankers want in the aftermath of misplacing a lazy $1BN of other people's money.

And for the icing on the top - Andrew Grech wants long term bonuses and incentives to stay on.

Memo to Slater and Gordon directors and executives.  Go to a pub on a Friday arvo and workshop your ideas of what's fair and reasonable before embarrassing yourselves and your company again.  And de-list your divided loyalties debacle - you can't put clients or the court's interests first when you're beholden to bankers.

Here's the Fairfax report from people who were at the shareholders meeting.

Slater & Gordon cops massive strike vote against its executive pay

Sarah Danckert 
  • Sarah Danckert

Law firm Slater & Gordon has been hit by a massive protest vote from shareholders against its pay packets as it delivered a quarterly update that showed ongoing issues in its UK business.

Nearly 45 per cent of shareholders voted against the company's remuneration report at a meeting that was marked by strong investor anger.

Slater & Gordon Chairman John Skippen leaves the company's AGM in Melbourne.
Slater & Gordon Chairman John Skippen leaves the company's AGM in Melbourne. Photo: Jesse Marlow

More than 32 per cent of shareholders also voted against a long-term incentive package for company chief Andrew Grech.

Slater & Gordon's decision to award bonuses follows a year in which the company paid no dividend after posting a $1 billion loss.

Slater & Gordon CEO Andrew Grech talks to investors after the company's AGM in Melbourne.
Slater & Gordon CEO Andrew Grech talks to investors after the company's AGM in Melbourne. Photo: Jesse Marlow

The loss was driven by a $1 billion-plus writedown on Slater & Gordon's disastrous purchase of UK group Quindell's professional services business.

The company was also forced to re-state its accounts during 2016 after an investigation by the Australian Securities and Investments Commission and is still viewed as being in the hands of its bankers National Australia bank.


Representatives from NAB attended the meeting.

Fuelling the ire of investors is a $189,000 cash bonus awarded to chief financial officer Bryce Houghton and a $93,750 cash bonus to chief operating officer Felicity Pantelidis and an increase in payments to the board including a nearly 50 per cent increase in fees to chairman John Skippen.

Slater & Gordon's has suffered a backlash from shareholders over its pay packages.
Slater & Gordon's has suffered a backlash from shareholders over its pay packages. Photo: Jessica Shapiro

Shareholder fury

Shareholder Marcel Coleman said he believed the board had "totally failed" in its governance role.

"It has really failed to have any financial oversight in place. Not one board member has put their hand up and accepted accountability for this," Mr Coleman said.

"The reality is this board has no credibility," Mr Coleman said, calling for all members of the board to stand for re-election.

"It's been a disaster. It's untenable to continue in this way."

Another shareholder told the board "you fellas have got to get real".

Mr Skippen reiterated his apology in relation to the UK acquisition.

Mr Skippen said the two executives were the only ones to be awarded bonuses, while the long-term incentive plan for Mr Grech was about retaining him as chief executive.

"Andrew Grech had offered his resignation to the board and we refused to accept ... It is unlikely the company would be able to recruit an executive with the same experience and set of skills," Mr Skippen said. He added that Mr Grech had been based in the UK since January.

During the 2016 financial year, Slater & Gordon's shares plunged from $3.69 to 39¢ as of June 30, 2016. The protests come despite chief executive Andrew Grech and a host of other executives declining bonuses this year.

Slater & Gordon said in its annual report that Mr Houghton was paid $100,000 on completion of his probation period and a further $89,600 for his contribution in finalising a new debt deal with Slater & Gordon's bankers.

'Very disappointed'

Mr Skippen again apologised for the terrible financial performance of the company during the year.

"We are very disappointed that we had to make such a large write-off relating to the Slater & Gordon Solutions acquisition and are very concerned by the underperformance of our UK operations in general," he said.

"We enter the 2017 financial year with the strategy and the people to undertake the program of improvement necessary to secure the future of the business."

Delivering the quarterly update, Mr Grech said Slater & Gordon's headcount in the UK had reduced by 16 per cent since the calendar year and the number of sites reduced from 47 to 32.

"The UK business remains in the process of transition. Whilst we're making progress there's still a lot of work to be done," Mr Grech said.

The company provided no figures for its first-quarter performance but noted its UK business was in line with budget, as was its Australian general law business.

Mr Grech said there had been some weakness in Victorian personal injury inquiry rates and that in the UK there had been fewer than expected settlements for noise-induced hearing loss claims.

Regarding the UK transformation, Mr Grech explained that "delays to the implementation has been experienced in some areas".

He added the company's UK business was "past the area of maximum risk".

After the meeting Mr Skippen and Mr Grech worked hard to avoid the media and refused to answer questions after the meeting.

Mr Skippen did answer a single question from the press relating to why he had not stepped down from the board of Slater & Gordon after being forced off the board of Super Retail.

"I am not stepping down. I am committed to the company," Mr Skippen said before swiftly leaving.

-With Kelly Hughes