Concurrent (LON:CNC)

3rd May by JollyBiologist

4 comments 391 reads

After Paul's analysis of Concurrents results this week, I wrote to the company querying the low director shareholdings. To their credit, the chairman, Mark Cubitt, replied very quickly with an offer to set up a call to discuss this. I've accepted this offer, so if anyone has any questions they'd like me to ask him, I'll do my best and report back here. My opening question will be - the CEO annual salary is worth more than my entire portfolio, yet I own more shares in the company than he does - how are our interests aligned?

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About the Author

JollyBiologist

Premium Member

4 comments

Cancun

3rd May

The new Jeremy Paxman haha... I did chuckle at that first question ... very best of luck

Darktrade

3rd May

Great point re management pay & lack of share ownership. I'd be interested in why they feel the need to make a token dividend payment. Surely at this time they have better uses for the cash. Was there pressure from old CNC holders that were used to chunky dividend payments?

JollyBiologist

6th May

OK, so not as much interest in this as I expected, given popular demand for CNC comment in the SCVR, but for what it's worth, here's a synopsis of my phone conversation with Mark Cubitt, chairman of Concurrent.

So I think it's to his credit that he took half an hour out of his bank holiday monday to talk to a fairly small retail investor to answer my questions/concerns. I couldn't decide whether he was being really passionate or really defensive - it was hard to get a word in edgeways! - and felt in the end it was a combination of both.

But on the key question of director remuneration and lack of share-holding, his arguments were:

you have to pay competitive money to get quality directors - Miles Adcock, CEO, is in demand and therefore commands a £250K salary plus 100% performance linked bonus. Directors accumulate shares over time. Incentive payments were linked to growing EPS by 10% a year and that this would be reflected in share price increase. There were also share options. I felt this was disingenuous and avoided my point that the directors are not taking on the same risk as a shareholder like myself - they get risk free reward (high salary) with a juicy bonus on top. There's no skin in the game. Contrast Jos Sclater at Avon Protection (LON:AVON) who has spent over £500K of his own money on buying Avon shares in the last year.

On the equity placing, he was a bit vague, talking about a need to strengthen the balance sheet and that it was done on the recommendation of their "advisors". He claimed that their institutional investors were very happy with the direction the company was taking. He also said that it's impossible to please everyone, and that lots of shareholders were unhappy that CNC doesn't pay a big dividend anymore.

He also gave me a link to an investor meeting this Thursday (9th May) https://www.investormeetcompany.com/concurrent-technologies-plc/register-investor

Sorry this isn't more detailed or insightful - it's the first time I've done anything like this and I wasn't really confident enough to push back harder on some of the points. He's clearly sincere and passionate about the company - but I wasn't sufficiently convinced and I've decided to sell on this peak and will sit on the sidelines to see if directors start buying.

Darktrade

9th May

Jolly, thanks for posting details of the conversation. Although I don't like it, with such generous option schemes, it does seem to be the trend that company management don't feel the need to dip their hands in their own pockets to buy shares. Still bugs me but I hold it less against management than I used to.

The 'but the institutional investors are happy' is also a well worn phrase. Although considering sp rise since the raise I'd be surprised if they weren't.

Can understand why you sold. For me only modest holding & think growth prospects look like some of the best on the market at the moment. Although all about ability to execute.

Thanks again for posting. Always good to let Board know PI's are keeping an eye on them.

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Concurrent (LON:CNC)

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About the Author

JollyBiologist

4 comments

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