Shareholders in Malin Corporation, the Dublin-based life sciences investment firm that's reviewing its strategy in the wake of a share price slump and boardroom shake-up, are being urged by a major advisory firm to reject its executive pay plan at an upcoming meeting.
Institutional Shareholder Services (ISS), which advises large investors on corporate governance matters, has recommended to clients that they vote against Malin’s remuneration report at the company’s annual general meeting (agm) on September 12th.
ISS said that Malin's award last year of restricted stock that are freed up over 23 months to chief executive Adrian Howd and chief financial officer Darragh Lyons is "not in line with local market standards", which expect long-term incentive awards to vest no earlier than three years of being granted.
ISS also said the terms of the company’s executive directors contracts entitling them to severance payments of two years’ salary and twice their prior-year bonus is way out of sync with what investors expect. Termination payments should be no more than 12 months’ salary, it said, citing the UK Corporate Governance Code.
‘Extensive review’
Malin's chairman of six weeks, Ian Curley, is preparing to update shareholders on an "extensive review of the company's portfolio and strategy" at the agm, as its shares are now wallowing at almost half the group's €10 initial public offering price in March 2015 – and a third of their all-time high – amid market concerns over the group's ability to deliver on its objectives.
Co-founded by Kelly Martin, a former chief executive of pharmaceuticals group Elan, and Elan's one-time general counsel, John Given, Malin's €330 million IPO was backed by UK-based Woodford Investment Management and the Ireland Strategic Investment Fund. However, since then, a series of investments in life science companies have been badly received by the market, while high administration costs and limited communication from the company on its strategy have also irked investors.
While Malin valued its portfolio of investments in life science firms – which range from medical and healthcare apps developer 3D4Medical to injectable drugs company Altan – at €401 million as of the end of December, its market value is currently €236.7 million.
Stepping down
A boardroom shake-up announced in mid-July saw Mr Curley, former chief executive of Ardagh Group and chief financial officer at Smurfit Kappa, become chairman with immediate effect, with directors Owen Hughes, Bob Ingram, Darragh Lyons, Kieran McGowan and Donal O'Connor stepping down from the board. Mr Lyons remains CFO of the company.
The overhaul also saw Malin appoint healthcare executives Jean-Michel Cossery and Rudy Mareel as non-executive directors.
Mr Martin left the company in October last year and a negotiated settlement saw him receive a €3.2 million exit settlement, compared to the €6.5 million to which we had been entitled.
