IOOF Holdings Limited (ASX: IFL) has faced a furious annual general meeting (AGM) today. Shareholders have accused the company of overpaying for its $1.44 billion MLC acquisition from National Australia Bank Ltd (ASX: NAB). The IOOF share price has fallen by 11.7% since the announcement of this deal on 31 August. Criticism to date has focused on the headline price paid for MLC. In particular, activist shareholder, Stephen Mayne, relentlessly accused the company of overpaying, highlighting the wealth destroying impact this can have.
Mr. Mayne asked repeatedly who registered the 17% proxy vote against the acquisition. Nonetheless, IOOF chair, Allan Griffiths, would not be drawn on the issue. Instead deferring it until analysis could be undertaken. Surprisingly, the IOOF share price is up by nearly 3% today, at the time of writing.
Another shareholder expressed his outrage, telling Mr. Griffiths “I vote against all resolutions, and will continue to do that as I think the handling of the MLC purchase was a disgrace.” He went on to state “You have butchered the share price.”
The growing rebellion in the ranks
A group was reported to be planning to vote against IOOF’s provision of operating funds for MLC subsidiaries. As a result, the company saw protest votes on all resolutions including, in particular, the reappointment of two directors. Elizabeth Flynn, recorded a 24.8% vote against her. Meanwhile, John Selak saw a 17% vote opposing his re-appointment.
Shareholders have expressed frustration over the price of and approach to the MLC deal. In particular, they believe the company used a COVID-19 waiver to issue 300 million additional shares on the basis of a non-COVID-related issue. However, an ASX spokesman responded that the rules were not limited to raisings under the health crisis. In addition, many critics are skeptical about claims by IOOF CEO, Renato Mota, that the MLC acquisition would add 20% to the company’s earnings per share (EPS).
Stephen Mayne pointedly questioned the chair’s competence to be running IOOF. Particularly as he has spent his career in unlisted financial services companies and has no additional directorships. He referred several times to the fall in the IOOF share price.
Mr. Griffiths pointed out he has only been chair for 18 months, during which time he had reset relationships with regulators, is implementing recommendations from the Hayne Royal Commission, and enjoys the full support of the board.
The falling IOOF share price
Since October 2017, the IOOF share price has fallen by over 60% during the heat of the Hayne Royal Commission. In the wake of the commission’s findings Mr. Mota confirmed to a questioner that conflicts of interest were always front of mind. As the four large banks have divested themselves of wealth management assets in response to the royal commission, IOOF has capitalised on this opportunity to propel itself past its longtime rival AMP Ltd (ASX: AMP) with regard to its funds under management.
In year-to-date trading, the IOOF share price remains down by more than 47%.