FirstGroup Investors Rebel Over Director Adam's Carillion Links

  • More than a fifth of shareholders oppose re-election to board
  • Train company confident that former CFO will ‘be of benefit’

U.K. train operator FirstGroup Plc pledged to stand by director Richard Adam following a shareholder rebellion against retaining the former finance chief of Carillion Plc, which last week took a $1.1 billion charge against problem contracts.

The re-election of Adam, who left builder and engineer Carillion at the end of 2016, was opposed by 22.7 percent of voters at FirstGroup’s annual general meeting, the Aberdeen, Scotland-based company said in a statement Tuesday.

Adam became a FirstGroup director in February after retiring from Carillion as he approached 60. Before exiting he signed off on a December trading update that said the company would make “further progress” in 2017, pointing to its order book and pipeline of contract opportunities. Carillion lost 71 percent of its market value last week following the revelations of cost overruns on public-private construction deals in the U.K. and contracts in the Mideast and Canada.

FirstGroup said in an email following the AGM that it noted the votes cast against Adam and that the board “takes seriously its responsibility to keep in touch with shareholder opinion.” It added that fellow directors remain confident that his “commercial acumen and experience from senior roles in large and complex international companies is of benefit to the company.”

Adam didn’t immediately respond to an emailed request for comment on the FirstGroup vote or Carillion’s prior trading statements. FirstGroup said he was about to board a flight and couldn’t be reached.

The size of the rebellion at the AGM came as a surprise, since Institutional Shareholder Services, an investor lobby group, had backed Adam in a note to subscribers. The Canadian activist fund West Face Capital was recently revealed to have acquired more than 5 percent of FirstGroup stock.

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