Oasis Management has warned it is ‘deeply concerned’ by TRG’s remuneration policy, which it says ‘continues the misalignment between pay and company performance’.
The investor goes on to call TRG CEO Andy Hornby’s pay – £658,000 base salary in 2022 – as being ‘disproportionate’ and 'failing to promote value creation’.
It says shares have fallen by c.73% since Hornby became CEO in 2019, which it describes as ‘a markedly greater decline than suffered by industry peers’.
Oasis has been gradually piling pressure on TRG since taking an initial 5% stake in the company last November.
In February this year it released a public letter that called for an ‘immediate and near-term’ change of governance at TRG, following what it said had been poor performance in its share prices.
The activist investor’s latest intervention comes as it increases its stake in TRG from 6.5% to c.12.3% of the company’s issued share capital, making it one of the largest shareholders of TRG.
Oasis is urging fellow TRG shareholders to vote against items 2, 3, and 10 – the Remuneration Policy, the 2022 Remuneration Report, and the re-Election of Zoe Morgan (Chair of the Remuneration Committee) – at the group’s upcoming AGM.
“We urge all shareholders to express their views directly and exercise their votes at the upcoming AGM to deliver a clear message that the Board’s existing approach to remuneration is failing to deliver for shareholders and should not continue,” says Oasis in a statement,
“Despite our significant concerns, Oasis continues to believe in the underlying potential of TRG’s business and has a strong desire to work with the TRG Board to overcome the Company’s strategic and governance challenges; we hope the Board will take bold steps in the near future to address the concerns of its shareholders and begin a virtuous cycle of value creation for all stakeholders.”
In its full year 2022 results, published last month, TRG reported that sales growth across its leisure estate, which encompasses the Frankie & Benny's and Chiquito brands, remained flat and was 5% behind the market. However, it also hailed 'robust trading' across its Wagamama, pubs and concessions arms, which all saw like-for-like sales out-perform their respective market benchmarks.
The group plans to exit around 35 potentially loss-making locations in its leisure estate over the next two years through a combination of exercising break clauses, lease expiries, selective conversions and accelerated disposals.
Responding to Oasis’s comments, TRG said: “TRG has performed strongly compared to the casual dining sector in recent years.
“Wagamama and pubs have consistently outperformed the market, leisure has been carefully restructured to maximise cashflow and we have successfully re-sized Concessions, so it is well placed to benefit as air travel continues to recover.
“As is normal, we are consulting with major shareholders ahead of our upcoming AGM on our remuneration policy.”