Micro Focus Intl - AGM 25 March 2020
Items 3 and 4: Remuneration report and remuneration policy: 2019 AGM voted down the remuneration report (49.67%) which gave senior managers an extra 12 months to hit performance targets and win £270m in bonuses. It gathered a lot of negative practices pointed out by the Investment Association (IA), such as re-testing or retrospective changes to performance conditions and practice of paying transaction-related incentive.
Kevin Loosemore, Executive Chairman since the group's IPO in 2005, stepped down in February 2020. And we hope that is was shareholder dissent and not his departure as the principal driver for the fundamental change in remuneration policy - abandon of one-off five-year incentive. We welcome the work of the remuneration committee led by Amanda Brown in engaging with shareholders and improved remuneration policy. However, we cannot approve the remuneration report and results of Attachmate ASG award gains in light of the Micro Focus performance.
Items 2 and 17: Dividend and share buyback: We have serious concerns about the sustainability of the Micro Focus distribution policy. The company issued several profit warnings and expects further revenue fall in 2020. The dividend has been financed through divestments and increased borrowing.
Share dealings: In July 2019, Kevin Loosemore, Executive Chairman, sold 650,000 Micro Focus shares in two tranches at a discount, for a total of £11.6m. This transaction caused a share price drop and was made one month and a half before the second Micro Focus profit warning.
Micro Focus International is a global enterprise software provider. Co.'s solutions help organizations leverage existing IT investments, enterprise applications and emerging technologies to address complex, rapidly evolving business requirements, including the protection of corporate information at all times. Co. has two operating segments: Micro Focus Product Portfolio and SUSE Product Portfolio. The Micro Focus Product Portfolio segment is managed with a single product group that makes and maintains the software. SUSE provides and supports enterprise-grade Linux and Open Source Software Defined Infrastructure and Application Delivery solutions.
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