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Trinity Mirror chair defends Sly Bailey's pay and performance to shareholders Trinity Mirror chair defends Sly Bailey's pay and performance to shareholders
(40 minutes later)
Trinity Mirror chairman Sir Ian Gibson has defended Sly Bailey's pay and the way she ran the newspaper group, in the face of a barrage of criticism from investors at its annual meeting on Thursday.Trinity Mirror chairman Sir Ian Gibson has defended Sly Bailey's pay and the way she ran the newspaper group, in the face of a barrage of criticism from investors at its annual meeting on Thursday.
Shareholders bombarded Gibson with questions and criticisms on how the company had operated since Bailey became chief executive.Shareholders bombarded Gibson with questions and criticisms on how the company had operated since Bailey became chief executive.
"It has been a strategy of despair rather than success and achievement," said shareholder Chris Morley, who is also a member of the National Union of Journalists. "Ever since she came in we have had year after year of cuts – and not always when the economy was bad – tens of millions of pounds of cuts and lots of good quality journalists, which has left the business weaker.""It has been a strategy of despair rather than success and achievement," said shareholder Chris Morley, who is also a member of the National Union of Journalists. "Ever since she came in we have had year after year of cuts – and not always when the economy was bad – tens of millions of pounds of cuts and lots of good quality journalists, which has left the business weaker."
He called on the board to bring in a new chief executive who would "grow the business rather than cutting it into a thousand pieces".He called on the board to bring in a new chief executive who would "grow the business rather than cutting it into a thousand pieces".
Gibson, however, argued that the company is not in "crisis" and is performing better than many "privately-owned" rivals. He said Bailey had delivered on the strategy required in the economic climate, backed by the company board.Gibson, however, argued that the company is not in "crisis" and is performing better than many "privately-owned" rivals. He said Bailey had delivered on the strategy required in the economic climate, backed by the company board.
Bailey was not required to field any questions and disappeared immediately after her last annual general meeting.Bailey was not required to field any questions and disappeared immediately after her last annual general meeting.
Another shareholder said "I've been coming to this [AGM] all the time, I've got no confidence in the board, all I can say is you're all fired."Another shareholder said "I've been coming to this [AGM] all the time, I've got no confidence in the board, all I can say is you're all fired."
However Gibson said: "She has consistently delivered robust profits and cashflows and importantly set the digital basis for the group going forward.However Gibson said: "She has consistently delivered robust profits and cashflows and importantly set the digital basis for the group going forward.
He denied a news report that Bailey had been awarded a £1m pay-off. "We asked for that to be corrected, she is not getting a pay off she is working her notice."He denied a news report that Bailey had been awarded a £1m pay-off. "We asked for that to be corrected, she is not getting a pay off she is working her notice."
He pointed out that since Bailey joined the Daily Mirror's publisher from IPC Media in 2003 she has had to manage the "worst and longest economic downturn this country has ever seen".He pointed out that since Bailey joined the Daily Mirror's publisher from IPC Media in 2003 she has had to manage the "worst and longest economic downturn this country has ever seen".
Bailey departs at the end of the year, and it is expected that up to 20% of shareholders will lodge protests votes against her pay and reappointment when Trinity Mirror publishes the results of its shareholder resolutions later on Thursday.Bailey departs at the end of the year, and it is expected that up to 20% of shareholders will lodge protests votes against her pay and reappointment when Trinity Mirror publishes the results of its shareholder resolutions later on Thursday.
Her departure was prompted by investor unrest at her pay – £1.7m last year and about £14m in total since she joined the company in 2003.Her departure was prompted by investor unrest at her pay – £1.7m last year and about £14m in total since she joined the company in 2003.
Gibson said that the board had not acted improperly over its remuneration scheme, which is headed by Jane Lighting who is also expected to be on the receiving end of disgruntled shareholder voting.Gibson said that the board had not acted improperly over its remuneration scheme, which is headed by Jane Lighting who is also expected to be on the receiving end of disgruntled shareholder voting.
He said that a comparison of pay at competitors, citing the Telegraph and Johnston Press, showed that the three executive directors at Trinity Mirror, including Bailey, were not overpaid.He said that a comparison of pay at competitors, citing the Telegraph and Johnston Press, showed that the three executive directors at Trinity Mirror, including Bailey, were not overpaid.
"We haven't been rewarding people irresponsibly," he said. "These three people and the team around them face off against some of the biggest media teams in the world.""We haven't been rewarding people irresponsibly," he said. "These three people and the team around them face off against some of the biggest media teams in the world."
Gibson defended Bailey's strategy of cuts and closing local newspapers. During her time in charge, Trinity Mirror's market capitalisation has fallen from more than £1bn to about £80m and its share price is down more than 90% to about 30p.Gibson defended Bailey's strategy of cuts and closing local newspapers. During her time in charge, Trinity Mirror's market capitalisation has fallen from more than £1bn to about £80m and its share price is down more than 90% to about 30p.
"It is false to say that the business in 2003/4 or 1989 or even now is as efficent as it ought to be," said Gibson. "It can be more efficient and should be more efficient even now. This is a secure business, it is in tough times but it is not in crisis. Many of our competitors, if they were not privately-owned,would be in crisis.""It is false to say that the business in 2003/4 or 1989 or even now is as efficent as it ought to be," said Gibson. "It can be more efficient and should be more efficient even now. This is a secure business, it is in tough times but it is not in crisis. Many of our competitors, if they were not privately-owned,would be in crisis."
He claimed that Northcliffe, the regional publishing arm owned by Daily Mail & General Trust, is worth "one tenth or one twentieth" of the £1bn it was valued at when it was put up for sale a few years ago.He claimed that Northcliffe, the regional publishing arm owned by Daily Mail & General Trust, is worth "one tenth or one twentieth" of the £1bn it was valued at when it was put up for sale a few years ago.
"Johnston Press was once our strongest competitor [in the regional newspaper market], now it has just scraped into existence for another 12 months," he said, referring to the recent financial resturcturing announced as Johnston Press reported a loss of £144m for 2011."Johnston Press was once our strongest competitor [in the regional newspaper market], now it has just scraped into existence for another 12 months," he said, referring to the recent financial resturcturing announced as Johnston Press reported a loss of £144m for 2011.
"No one ever wants to reduce jobs, I guarantee you that," said Gibson, who added that if parts of the company, such as individual newspapers, are not viable they have to dealt with so as not to "risk the whole business"."No one ever wants to reduce jobs, I guarantee you that," said Gibson, who added that if parts of the company, such as individual newspapers, are not viable they have to dealt with so as not to "risk the whole business".
Gibson said that it would be suicidal to invest enormous amounts of money into the business before the economy returned to sustainable growth.Gibson said that it would be suicidal to invest enormous amounts of money into the business before the economy returned to sustainable growth.
"To try and bring [them] back now would drain profits so quickly businesses would disappear within months, not years. That is a fact," he said. "We only need a £50m decline in those profits and this business is no longer viable. Whatever strategy you want you can only implement it if you survive to implement it," he said. "To be bold when you bleed to death is not being bold, it is foolish"."To try and bring [them] back now would drain profits so quickly businesses would disappear within months, not years. That is a fact," he said. "We only need a £50m decline in those profits and this business is no longer viable. Whatever strategy you want you can only implement it if you survive to implement it," he said. "To be bold when you bleed to death is not being bold, it is foolish".
He all but ruled out a potential sell-off of its regional newspaper business, pointing out that competition regulations would make a combination with a rival difficult and that the market conditions means that any deal price would not be in Trinity Mirror's interest.He all but ruled out a potential sell-off of its regional newspaper business, pointing out that competition regulations would make a combination with a rival difficult and that the market conditions means that any deal price would not be in Trinity Mirror's interest.
He said there was significant value in its portfolio, pointing to the turnaround the company engineered after acquiring the regional newspapers owned by Guardian Media Group, publisher of the Guardian and MediaGuardian.co.uk, which included the Manchester Evening News.He said there was significant value in its portfolio, pointing to the turnaround the company engineered after acquiring the regional newspapers owned by Guardian Media Group, publisher of the Guardian and MediaGuardian.co.uk, which included the Manchester Evening News.
"We made it profitable and expanded its reach within 12 months using management techniques some of you may not be happy with," he said. "We got it for a very low price because it was an asset that was expected to disappear. It is now a substantial and important part of our portfolio.""We made it profitable and expanded its reach within 12 months using management techniques some of you may not be happy with," he said. "We got it for a very low price because it was an asset that was expected to disappear. It is now a substantial and important part of our portfolio."
He said that while the print assets were "treasured" they would be milked for cash while Trinity Mirror focused on long-term growth, focused on digital products.He said that while the print assets were "treasured" they would be milked for cash while Trinity Mirror focused on long-term growth, focused on digital products.
"We have planted an enormous number of digital seeds, some will fail," he said."We have planted an enormous number of digital seeds, some will fail," he said.
Gibson said that the company was undervalued by the stock market because of an "exaggerated fear" about the failure of the business model underpinning its flagship titles.Gibson said that the company was undervalued by the stock market because of an "exaggerated fear" about the failure of the business model underpinning its flagship titles.
"[They are] expecting mass newspapers to die in a couple of years, not 10 or more," he said."[They are] expecting mass newspapers to die in a couple of years, not 10 or more," he said.
The other issue was the concerns raised about the often wildly swinging pension deficit, which stands at £176m, which Gibson said was due to the way it was periodically measured. He said the company was considering more frequent publication of the deficit to allay concerns and to show that fluctuations are normal and not a major concern.The other issue was the concerns raised about the often wildly swinging pension deficit, which stands at £176m, which Gibson said was due to the way it was periodically measured. He said the company was considering more frequent publication of the deficit to allay concerns and to show that fluctuations are normal and not a major concern.
Speaking after the AGM, David Grigson, the chairman designate who will takeover from Gibson on 3 August, said that wider changes at the Trinity Mirror board are likely over the next year.
"I think it is one step at a time. When we've got the CEO and are clear on the strategy then we can look at the board and ask if we have the right people at the table to support that strategy. But I wouldn't do that now. There are opportunities to refresh as people step off.
"Boards are constantly in need of refreshment, it is the same with
management, it is the same with companies."
He also hinted that if the right replacement for Bailey can be found then perhaps she may not stay until the end of the year.
"I'm really glad she is staying, we have some very important things to do and I don't want to leave any vacuum," he said. "Always, in any changeover, there is a risk of some degree of inactivity, a gap as a person comes in. My job is to minimise that impact."
Bailey's successor will be paid "differently" he said, marking the end of the remuneration packages of £1.7m or more that she has enjoyed, with much more focus on performance targets.
"There is scope to do things differently," he said.
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