Electra loses board battle with Sherborne, Yates steps down

Greg Gille
05 November 2015

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Electra Private Equity shareholders have voted in favour of Edward Bramson and Ian Brindle taking seats on the company's board of directors during a general meeting held on 5 November.

Around 53.5% of voters were in favour of the two resolutions introducing the board changes, with 46.5% voting against. More than 85% of the shareholder base took part in the vote.

Bramson and Brindle have therefore been appointed as non-executive directors of the company, effective from 5 November.

Electra chairperson Roger Yates, who had been spearheading the firm's criticism of Bramson and his investment vehicle Sherborne, stepped down as chair and resigned from the board with immediate effect. Dame Kate Barker will assume the role of chair until a replacement is appointed.

The result of the vote will come as a major victory for Bramson, who had been engaged in a long-running feud with the board of Electra. The disagreement between the activist investor and Electra escalated for most of 2014, with Bramson's vehicle, Sherborne Investments, steadily building up its stake before requesting that three new directors (including Bramson) be appointed to the board of the listed private equity firm. Furthermore, Bramson expressed his intention to lead a strategic review of the company following the board appointments.

The demands were shunned by Electra's board in July 2014, which argued Bramson and the other proposed directors wouldn't be independent, and highlighted Electra's outperformance as proof that the current governance was not detrimental to the business. Sherborne subsequently called for a shareholder vote on its propositions in September 2014 - around 62% of shareholders voted against Sherborne's motions.

Although vindicated, the private equity firm announced its intention to conduct a review of its fee arrangements, capital structure and distribution policies.

Bramson initiated a second attempt at gaining a seat on the board in September this year, with Electra forced to put the resolutions to a general meeting vote on 5 November. The private equity firm once again issued several strong-worded criticisms of Bramson's strategy and track record, and highlighted its own performance with a board independent from shareholders.

In a letter sent to shareholders in early October, Electra's Yates zeroed in on Sherborne's "short termism" and alleged focus on cost-cutting, contrasting it with Electra's growth-orientated strategy. "Shareholders will remember that Sherborne's track record and investment objective are firmly activist, characterised by cost-cutting and short termism, and your board considers that the appointment of Sherborne nominees could be materially damaging to the success of a long-term private equity mandate where the strategy for creating value is based on growth," Yates wrote.