Chelsea Pitch Owners 2014 AGM Report (or ‘CPO Comes To Its Senses’)

Meeting Report

The Chelsea Pitch Owners 2014 AGM took place on 31st January 2014 in the Harris Suite at Stamford Bridge in the presence of approximately 120 shareholders. Chairman Steve Frankham (SF) declared the meeting quorate at 11am and opened the meeting by introducing his fellow Directors.  He went on to thank the assembled shareholders for notifying their attendance in advance, thus assisting with planning for the meeting and helping to keep costs down. He advised that on legal advice, no tweeting would be permitted from the meeting and the Chairman’s statement would be published on the CPO website around 1pm.  SF went on to outline the format the meeting would follow, which would be along the lines of last year’s meeting, being Chairman’s Statement, questions from the floor and then the vote.

Business commenced with the Chairman’s Statement, the main points being as follows:

  • 721 new shares sold in financial year between August 2012 and July 2013, 92% of which were individual shares.
  • The calendar year of 2013 was second most successful year for share sales after 2003.
  • Working arrangements within CPO have changed, with recently-appointed Secretary Charles Rose (CR) being tasked with cutting costs.
  • Efforts continue to clean up the shareholder register – 15% of shareholders have either wrong details or no details at all.
  • At part of cost-cutting measures, three quotes were obtained from auditors, with Hanaways re-appointed.
  • Legal costs continue to be biggest outgoing, but Sean Jones (SJ) and Gray Smith (GS) are able to assist here with their professional expertise.
  • High costs were incurred through the issue of Section 793 letters [letters to shareholders asking if any other party held a beneficial interest in their shares], but was felt to be a worthwhile investment, with the Board believing that the time has now come to draw a line under this issue and move on to expanding the membership.
  •  The ‘Written In The Stars’ Dinner realised a profit of £6,000 and the forthcoming ‘One Special Night’ dinner with Jose Mourinho sold out in 48 hours. SF appealed for any shareholders with ideas for further fundraising initiatives to come forward.  SF confirmed that CFC have agreed to scrap the 2009 agreement whereby any profits from CPO events were donated to the Past Players Trust. He also clarified the issue of a donation to the PPT which was made from the profits of a book he co-authored, and was not connected with CPO.  He went on to thank a number of individuals both inside and outside the club for their assistance with share signings and donations of memorabilia.
  • SF cited that marketing shares continued to be the board’s priority, and advised that the Board were not privy to any information in respect of StamfordBridge, including any planning applications.  He advised that the Board continue to have regular meetings with Bruce Buck, who has no news regarding a new site or ground expansion, and concluded by stating that the interests of shareholders would prevail.

The Chairman’s statement concluded, the meeting went on to take questions from the floor, with a limit of 90 minutes allowed.

CR read out questions by email from Dave Patton and Geoff Hedges regarding CFC’s plans [i.e. any future proposal].  CR stated that they would look at any proposal in detail, but it is difficult to formulate a strategy for an unknown proposal. SJ added that any proposal might include a request to end CPO, but he would wish it to continue.

A floor questioner asked how, in the event of CFC requesting and being granted planning permission to expand Stamford Bridge, this might affect CPO.  The majority of Board members responded that they would look for CPO to continue in some form in the event of ground expansion.

James Greenbury referred to the short notice given prior to the October 2011 EGM, and asked if the Board were willing to give a sizeable timeline in the event of any future proposal.  He also asked if shares would remain on sale in such an event.  SF responded that they wouldn’t let that happen again.  The Board would consider cessation of sales. GS added that last time the then Board had not been sufficiently neutral to the proposal made by CPO.

Dave Spring asked the Board to give an undertaking that at least 30 days’ notice would be given in respect of any EGM resultant of a proposal by CFC, and asked the Directors whether they would support any proposal made by CFC.

SJ responded that the matter of notice and any such undertaking would be subject to legal requirements.  He agreed that the last meeting was called very quickly, which was not a good idea as such a matter required proper debate.

Mr Spring then requested that the Board make a commitment to share sales being suspended immediately on receipt of any future proposal.  CR stated that circumstances were now different in that requests to buy large blocks of shares were very rarely received, and those individuals who do apply for a large number receive a phone call from a director.  He went on to say that he voted against the proposal last time and would do so again.

SF confirmed that he would not rush into voting for any proposal this time as his eyes were much more open now.

GS stated he would vote against any proposal.

RG stated that shares remained on sale in 2011 as it was felt unfair to deprive individuals of an opportunity to have a say, in which view he sincerely believed.  He reiterated that whilst he didn’t regret the decision to continue share sales, but he regretted the over-selling.

Mirek Malevski asked if any of the owners of the so-called ‘Concert Party’ shares were in attendance. SF said the meeting would address this, but stressed a line needed to be drawn under the issue.

SJ commented that there were two strategies to deal with the disputed shares.  The first was dilution, which had three advantages, firstly that it works, secondly that it doesn’t cost anything, and finally that CPO are better off as a result.  The second is the legal route, which was addressed by issuing the S793 letters.

Shareholder Mark Barrington stated that all he cared about was CPO and it was critical that the Board ‘got a grip’ as there were too many large blocks of shares held.

CR stated that he believed that concentrating on the disputed shares is damaging to CPO, CFC and its fans.

Ralph Ellman put it to Rick Glanvill (RG) that he had said continuing to sell shares in 2011 was an error. RG stated that this was not the case; that he deeply regretted the over-sale of shares but not the continuation of the sale of shares itself.  GS went on to say that CPO had now sold in excess of 1100 shares in the 19 months since sales had re-commenced, and, as a result he would now support a future suspension of sales on the grounds that he believes that most people who would want to engage would have had sufficient opportunity to buy a share, a view which RG concurred with.

Adil Pastakia requested further clarification from the board on how they would feel about a future proposal. SF responded that he would want CPO to become more involved in the process.  Mr Pastakia asked, in the interests of transparency, how many shares SF controlled.  SF responded that CPO has a legal obligation to represent its shareholders.  CR advised that most proxies are mandated [i.e. votes already cast and not at discretion of Chair]. Approximately 2,000 proxy forms were received, but 1,900 were already mandated. He added that in a break from usual practice, the result of the proxy vote would be announced prior to the commencement of voting from the floor.

Shareholder Bill Carroll stated that he would wish to consider a proposal and not dismiss it out of hand.

Another shareholder, Colin King, asked what the legal position with regard to any attempted takeover would be.  Andrew Edge, representing CPO’s legal advisors, commented that it is very unusual for share sales to be suspended and there is no legal obligation to do so, albeit CPO is different to a stock market quoted organisation. However, the bottom line is that it will be for the Directors to make a decision. He added that the Directors are also legally obliged to consider any proposal properly.

Shareholder Tim Rolls asked what the Board’s relationship with CFC is like.  SF replied that CPO needs to cover its costs and are currently raising funds to do so; the Board has a relationship with CFC, e.g. being able to secure the presence of Jose Mourinho for the fund-raising dinner. He stressed that CPO are receiving a lot of support from the club.

SJ described the relationship as ‘cordial’ and went on to say that Bruce Buck respects the need for confidentiality.  Initially he would have thought CFC to be less than co-operative, but has been pleasantly surprised. Mr Rolls stressed that there is a difference between being supine and cordial. SJ commented that he is subservient only to his wife [laughter].

Mirek Malevski asked if the Board were concerned that Roman Abramovich only wants the freehold of CPO. CR reiterated that CPO are awaiting any further proposal from CFC.  Mr Malevski asked if the CPO shareholders would be the first to hear of such a proposal.  CR voiced his concern that there was always the possibility that a third party might brief the press. GS commented that it has to be possible for the club to have a confidential relationship with the CPO Board. SJ commented that Mr Abramovich wanted the freehold before, but CPO said no.  He believes the same will happen again.

Darren Mantle referred to the inducements shareholders were offered in the previous proposals, and asked the Board if they felt increased inducements would be made.  GS commented that the meeting could conjecture all day but the organisation would have to deal with each proposal on its merits.

RG was again pressed on the issue of share sales continuing in the run up to the 2011 EGM. He reiterated that this decision was taken to enable as many small shareholders as possible to have a say.

Shareholder Chris Taylor commented that the Articles of Association stated CFC would bear CPO’s reasonable costs and wondered if this was still the case.  If not, was it possible to change the Articles?

CR responded that in those days CFC and CPO had a close relationship, with CPO having its own staff and offices.  However, CPO has been in the doldrums, and the days of CFC meeting unreasonable costs have ended as a result of FFP. Ultimately, if CPO make a loss, then they can’t pay off the loan. SF commented that CPO retains a percentage of its income against costs, but GS stated that CPO is unable to put up the rent.  Chris Taylor asked them to qualify “reasonable costs”.  GS commented that CPO were under a constant obligation to take reasonable steps to pay the loan, otherwise CFC could ultimately pull the loan.  Mr Taylor commented there must be a figure relating to costs somewhere in the accounts, and CR replied that there was no transfer last year as they had the cash for costs. The issue of CFC only paying CPO a “peppercorn rent” arose, causing some disquiet in the room.

Shareholder Mike Brown commented that there seemed to be a huge amount of animosity in the room, which he found upsetting.  All he wanted was to find out exactly what the club was doing, and requested the Board stay as close to CFC as possible.

Dave Spring queried amendment of the Articles of Association to allow for electronic communication, and requested confirmation that no other changes would be made.  GS confirmed this was the case.

A question was put from the floor regarding the establishment of a Trust fund to pay off the loan. CR replied that he was aware of this suggestion, and had not had an opportunity to look in to it as yet but would do so.

Dave Spring thanked CR for his efforts since becoming Secretary of CPO. He added that anyone who couldn’t see the necessity of separation between CPO and CFC doesn’t understand CPO.

Shareholder Derek Martin added a comment in support of SF’s earlier clarification regarding a donation to PPT.

Jim Cowan reminded the Board that at the past two AGMs he had made a plea for a long-term strategy to be implemented.  CR advised the meeting that although a meeting had taken place with Mr Cowan with a view to taking this forward, it was not pursued due to lack of money and time.  Mr Cowan reiterated his question, to which CR responded that the Board have spent much of their time fire-fighting on a number of fronts, concentrating on selling as many shares as possible.

GS commented that CPO is an unusual company in that its obligations are to look after the shareholders, protect the asset, and pay off the loan.  This strategy is clearly defined and the Board are doing the best they can to adhere to this.

Colin King asked if there was likely to be an increase in the cohort of the Board to assist them in their workload, to which SF responded that there were no plans in this regard.

A questioner from the floor asked if any progress had been made with regard to the “Pay As You Can” scheme targeted at younger/less affluent supporters.  CR confirmed that a pack was being assembled for this, but the scheme needed tidying up. The same questioner stressed the urgency for greater numbers of younger supporters to become involved in CPO, given the decidedly middle-aged demographic. CR added that the Board were targeting 1,000 share sales a year and hoped to develop a waiting list.

A question was put to the Board in respect of an incident at last year’s AGM in which officers of the Metropolitan Police sought to establish the presence of a particular shareholder at the meeting, and asked if it was the policy of the Board to assist the Metropolitan Police in harassing shareholders. GS and CR pointed out this question was irrelevant, as the individual in question was no longer a shareholder, having transferred their shares to a relative.

Mark Wyeth QC reminded the meeting that the remaining loan sum is currently £1.8 Million [NB the actual remaining sum to be repaid is £8.4Million], and asked what would happen in the event of an individual presenting this sum to the Board. SF commented that they’d have done their job. Mr Wyeth commented that things would undoubtedly have to change. GS said he’d like to see it, but it would create a new set off problems.

CR read a further email question from Mike King, regarding the AGM and its timings, and also requesting that the resolutions could be set out more clearly. His response was that although there were some limitations (i.e. not possible to hold meetings on match days) the Board had been trying to increase transparency, and if anyone had ideas about future AGMs, they should get in touch via the website, as they were always open to discussion.

A question was put from the floor regarding the accounts item “creditors”. CR advised that he couldn’t answer this question immediately, but would obtain the requested information.

CR also confirmed that Rawley & Co had been employed to re-value the property and he would undertake enquiries as to how their valuation was arrived at.

Dave Spring asked if the Board would approach Bruce Buck and point out that if CFC had to pay a commercial rate of rent, this would run into millions of pounds, but they charged CPO for hire of the meeting room.  He added that 90 minutes was too short a period for questions, and suggested the time be extended to two hours.

One shareholder pointed out that he was proxy for four shareholders who were at school; SF reiterated his comment that the board were open to suggestions regarding future AGMs, which was supported by CR.

With the 90 minutes for questioning concluded, SF moved to the formal business of the meeting.  During this time a shareholder put a question privately to CR regarding the matter of the vote being counted away from Stamford Bridge.  SF and CR discussed this off-microphone and advised that they had received a request that in the event of any future contentious vote [i.e. an EGM] taking place, that this would be carried out at Stamford Bridge as before.  SF stated that this would be likely to be the case.

He then went on to name the resolutions and stated that shareholders had 10 minutes in which to cast their votes.  Following this, at approximately 12.45pm, the meeting was closed.

The results of the vote were posted on the CPO website on Saturday 1st February, and are briefly as follows:-

Ordinary Business (requiring 50% of vote to pass)

Resolution 1.1 – To receive the annual accounts

For                   Against

2889                 183

Resolution Passed (94.6%)

Resolution 1.2 – To Re-Elect Steven John Frankham

For                   Against

2606                 466

Resolution Passed (84.8%)

Resolution 1.3 – To Re-Elect RGC Smith

For                   Against

2938                 130

Resolution Passed (95.76%)

Resolution 1.4 – To Re-Elect Richard John Glanvill

For                   Against

2482                 587

Resolution Passed (80.87%)

Resolution 1.5 – to Re-Election Sean William Jones

For                   Against

2863                 207

Resolution Passed (93.26%)

Resolution 1.6 – To Re-Elect Charles George Rose

For                   Against

2865                 209

Resolution Passed (93.20%)

Resolution 1.7 – To Re-Appoint Auditors

For                   Against

2722                 335

Resolution Passed (89.04%)

Resolution 1.8 – Remuneration of Hanaways

For                   Against

2738                 310

Resolution Passed (89.83%)

Special Business (requiring 75% of vote to pass)

Resolution 2.1  – Authority to Allot Shares

For                   Against

2707                 344

Resolution Passed (88.73%)

Resolution 2.2 – Disapplication of Pre-Exemption Rights

For                   Against

2698                 351

Resolution Passed (88.49%)

Resolution 2.3 – Electronic Communications

For                   Against

2853                 175

Resolution Passed (94.22%)

The above represents the facts of the meeting as taken down to the best of my ability during the course of the CPO AGM. Any comments in square brackets (i.e. []) are intended to clarify matters for the benefit of the reader. The author apologises in advance for any misspellings, misrepresentations or factual errors which will be corrected on receipt of any advices.

Meeting Opinion

The real headline coming out of Friday’s AGM is in fact “CPO Finally Comes to Its Senses”.  Indeed, I have never attended an AGM at which there was so little real antagonism between the Board and what The Sun described last week as the “rebel shareholders”.  That description in itself is a little unfair.  These are shareholders who devote a fair amount of their time pondering the issues attaching to CPO and aren’t afraid to ask awkward questions.  From some of the answers given during the course of the meeting, particularly from the newer members of the Board, it’s becoming very clear that any future proposal by CFC will not be the pushover the club might anticipate – the mantra was very much along the lines of reasonable consideration to be given, but a wish for CPO to continue.  From personal soundings, I am aware that, for instance, in the event of CFC making a proposal along the lines of wishing to expand the stadium, but requiring an South East Asia Stock Exchange flotation to do so, which would require assets in excess of £2 Billion which the club do not have without the lease for the pitch, this would find favour with shareholders (certainly the ones I’ve surveyed).

As the board maintain, the best way forward for CPO to dilute the significant blocks of shares is by sales to small shareholders.  I have to say that if I was a Chelsea supporter approaching a landmark birthday, I’d ask friends/family for a CPO share as a present (or contributions thereto).  Another aspect that clearly needs to be addressed is the demographic. Although awareness of CPO is gathering momentum amongst younger supporters, the demographic of CPO shareholders remains resolutely male and middle-aged – pretty much like the demographic of Chelsea’s support itself.  Only one female speaker (myself) addressed the meeting. It was encouraging, however, to see approximately 120 shareholders in attendance, easily exceeding last year’s attendance, albeit last year’s AGM was held not only on a Wednesday, but coincided with an away game against Reading, which undoubtedly affected the numbers.

The results of the vote will provide some food for thought for the Board.  The three newest Directors, Gray Smith, Charles Rose and Sean Jones continue to enjoy the confidence of the voters.  Indeed, it comes to something when even fiery CPO activist Dave Spring is congratulating Charles Rose for his efforts to date as Secretary.

However, judging by the voting figures (even though these were roughly 3% higher each this year) Steve Frankham and Rick Glanvill are still struggling to convince some shareholders, each lagging considerably behind their fellow directors when the votes were totted up.

It was also something of a surprise to learn that Resolution 2.3 was passed so overwhelmingly.  Given the Chairman’s statement that no fewer than 15% of shareholders have either no details or incorrect details on record, and the requirement that in the event of Resolution 2.3 being passed, shareholders needed to return a slip to confirm they wished to continue to receive paper communications, this means that as many as 2,700 shareholders may end up not receiving communications from CPO.

And that brings us to another issue. There are approximately 18,000 shares held in CPO – that’s potentially 18,000 votes.  Yet only around 3,000 votes were cast.  Unfortunately it looks as if the vast majority of shareholders cannot be bothered to exercise their right to vote.  Whilst this year’s AGM passed without any major bones of contention, engagement is a two-way street.  The Board of CPO need to engage with the shareholders, but equally the shareholders need to engage with the organisation.  There doesn’t seem much point to me in holding a share and not taking an interest in proceedings, especially since the events of 2011.

In conclusion, it genuinely does look as if CPO may be sailing in calmer waters now.  But there’s no doubt that eventually, another hurricane will approach.

In Other News

Chelsea Supporters Trust

The Chelsea Supporters Trust celebrates its first anniversary on Sunday, and we at TheChels.Net have reason to believe that they have an announcement up their sleeves.  Keep an eye on their website (link) and social media sources for all the big news.

Don’t forget that CST membership badges are now available available from the cfcuk stall on match days.  If you can’t get to the stall, visit the website for more details on how to get yours.

Jim McSkimming Fundraiser

A Burns Night event in Sandhurst raised £3,600 to buy a defibrillator in memory of Matthew Harding Lower season ticket holder Jim McSkimming, who sadly passed away very suddenly in August.  The event was attended by a number of Chelsea fans who knew Jim, and you can read an account here. Jim might be gone, but he remains very much in the hearts of all who loved him.

We’ll be back again with more news from in and around SW6 as the push for honours gathers momentum. In the meantime, you can follow me as always @BlueBaby67.