The celebrated sculptor Henry Moore visited Street in 1979 to discuss the purchase by Clarks of his sculpture Sheep Piece. Left to right: Bancroft Clark, Daniel Clark, Ralph Clark and Henry Moore.
WALTER DICKSON arrived in Street in July 1991, just a few weeks after Harrods opened a children’s shoe department run by Clarks. The Courier of that month reported breathlessly on the Harrods story, running it as a page-one splash. ‘We had Diana Ross and Rod Stewart – and the Sultan of Brunei is a good customer. But there is room for ordinary people,’ said Angela Holmes, the manager of the Harrods branch.
‘Change at the top,’ announcing Dickson’s arrival, featured on page five and contained an interview with the new chairman by Ian Ritchie, head of public relations, who did not take long in getting to the heart of the ownership issue.
‘Mars is a family company. So is C. & J. Clark. What are your views on the contrast between a family and public company?’
‘The family business structure is not bedevilled by the short-termism forced on business by the City,’ replied Dickson. He went on:
That particular feature was a hallmark at Mars and it seems to me that CJC has the same attitude in terms of time horizons … There is a marked determination to maintain quality at Clarks … Although there are differences between family and public companies, both business structures have got to answer to an outside audience … The difference is that the institutional shareholders are more faceless and uninvolved than are the shareholders in Mars and Clarks. Therefore there is more direct linkage with the shareholding community of a private family company than there is in a public company.
And when that ‘direct linkage’ turns toxic it is not long before the board is brought to its knees. Just as football managers forever resort to the cliché about how ‘at the end of the day it’s all about results’, it must have been evident to Dickson that only returning the company to sustained profitability – with a healthy dividend paid to shareholders – would keep the peace.
It was never going to be easy when substantial family shareholders continued to agitate in the background.
‘The family became a board outside the board and that was always my gripe,’ says Malcolm Cotton. ‘It meant there were two boards trying to run the company. It was a hopeless situation and it became clear that something major had to change.’
Lance’s cousin Richard, one of Bancroft’s sons, was about to join the board, and he too had grave reservations about the way the company was being driven, about its range and quality of shoes and about its reluctance to implement the repeated recommendations made by management consultants. Richard had done his own sums and worked out that 25 per cent of profits from 1981 to 1991 had come from selling off assets, such as defunct factories and other properties or disused factories, rather than from the sale of shoes.
One asset sold was a Henry Moore sculpture that Clarks had bought in 1981 for £150,000. In an article composed for the Village Album, a mainly Quaker group that met (and still meets) once a year, and where members read out essays or poems, Ralph Clark recalled how the company had written to Moore asking if the artist might contemplate disposing of ‘any rejects’. Moore replied some months later, apologising for having temporarily mislaid the letter and saying that he had no ‘rejects’, but would be happy to discuss matters further. As Ralph wrote:
The meeting duly took place at his fascinating studio in Hertfordshire, when it was politely made clear that it was not so much a matter of whether we wanted a piece but rather whether Mr Moore thought we were fit people to have one … the frail and modest 81-year-old artist turned out to be a formidable salesman.
Moore visited Street to inspect the site outside Netherleigh, the original home of James Clark, where it was proposed the sculpture – called Sheep Piece – would stand. Moore made approving noises. Clarks would take the work on trial while a price was agreed. Ralph described how two lorries carrying five tons of bronze arrived and the sculpture was assembled on site. Moore then arrived and wanted his creation to be moved six feet to the left.
Sheep Piece appeared to some to depict two sheep fornicating – or at least one sheep climbing on the back of another. According to Ralph’s essay, the reception was mixed, with some local councillors describing it as ‘obscene’. Several months later, Moore telephoned Street to say that a Japanese company had also expressed an interest in the sculpture. Ralph recalled:
Could we please make up our minds? A nice large and round sum was mentioned. Many discussions took place and finally it was decided to buy – it was, after all, an investment … I only hope, if ever we have to sell, that the buyer has somewhere to put the piece, but if he does, he will not have half the fun we had buying ours.
The Henry Moore sculpture was sold to PepsiCo in 1991 for around £2.1 million and taken to the American company’s sculpture park in Purchase, New York, where it remains today, alongside two other works by Moore.
‘I was sad to see it go,’ says Richard Clark. ‘But it didn’t surprise me, because it was another way of propping up the profits. What did bother me was hearing people say that Clarks was selling off the family silver.’
What bothered Richard even more was the idea of floating the company and selling it to new owners. This was an over-my-dead-body option for him and for many other members of the family. Caroline Gould, an architect, whose mother, Eleanor, was Bancroft Clark’s sister, was one such disaffected director. From 1987, she had been Stephen Clark’s alternate on the board, but when he stood down in 1990 she replaced him in her own right. Gould explains:
The celebrated sculptor Henry Moore visited Street in 1979 to discuss the purchase by Clarks of his sculpture Sheep Piece. Left to right: Bancroft Clark, Daniel Clark, Ralph Clark and Henry Moore.
When Daniel was chairman the board was anything but collegiate and this continued after Walter Dickson took over. He was a great talker, but there was little evidence he was bringing the executive together … there was a lot of working behind the scenes from all sides.
Dickson put in place a new management structure of C. & J. Clark Ltd, which took effect on 1 February 1992. Its main thrust was that the existing subsidiaries, including Clarks Shoes and K Shoes, were replaced by a single company, Clarks International Ltd, with its own executive board.
‘The new structure is charged with the management of the strategic and tactical whole,’ said Dickson in his first Annual Reports and Accounts. ‘Our aim is to become a world class business in terms of product quality, operational efficiency and, as a consequence, in profitability.’
New structures had become something of an abiding theme, normally accompanied by upbeat forecasts for the future. On this occasion, it was John Clothier, the chief executive, who told the Courier that this latest new dawn ‘represents a real opportunity to transform our business performance and [to] give all of us a truly exciting prospect for the future’.
Certainly, the reshuffled hierarchy had a simpler format. There were five main divisions: brands, under Malcolm Cotton; retail, under David Lockyer; overseas, under Patrick Farmer, who joined the main board in 1990; personnel, under Kevin Crumplin; and finance, under Alan Mackay. Clothier made it clear that transforming the business would not ‘fall into our lap’ and that ‘many difficulties were on the way’. He was proved right on both counts – but the difficulties were of a kind he might never have envisaged.
The environment in which Clarks was operating was not encouraging. Footwear in the UK was in the doldrums, with the market broadly static between 1986 and 1989 and then falling in 1990 and 1991. Out of all consumer spending, that on shoes accounted for 1.23 per cent in 1983, but had dropped to 0.98 per cent by the time Dickson began his part-time, non-executive chairmanship of Clarks. In real terms, spending on footwear fell 4.5 per cent in 1991.
Verdict, a market research group specialising in retail, predicted that even if there were a recovery in the economy it would make little difference to the footwear industry, where the three biggest players were the British Shoe Corporation with an 18.3 per cent share, Clarks with 8 per cent and Marks & Spencer with 5.9 per cent. Footwear prices, said Verdict, had risen at about two-thirds of the rate of retail prices as a whole. It warned that either prices or volumes would have to increase, or else ‘a number of companies will cease to function’.
The harsh realities predicted came true in 1992, when Sears – which controlled the British Shoe Corporation – reported an £8.8 million pre-tax loss for the first six months of the year and immediately announced it was closing dozens of Dolcis, Saxone and Freeman, Hardy & Willis shops over the next three years in what became a £32 million restructuring programme.
Clarks’ six-month interim results to 1 July 1992 were depressing. The company made a £3.5 million pre-tax loss against a £2.5 million profit in the previous period. The decision was made to halve the dividend from 3.5 pence to 1.75 pence per share. Some 70 per cent of the shares were held by the family, another 10 per cent by family trusts, and 10 per cent by employees, leaving just 10 per cent in the hands of institutional investors.
A few months earlier, in February 1992, it was announced that 300 jobs would go across Clarks and K Shoes. Some 100 of those were backroom staff in Street and in Kendal, but K Shoes’ Norwich factory ceased operations immediately and Clarks’ Barnstaple factory was reorganised with the loss of 33 jobs.
Kevin Crumplin, the Clarks director of personnel, put out a statement expressing ‘very deep regret’, adding how he was ‘absolutely certain that we will come out of it a leaner, stronger and more secure company’. Two months later, that security looked more precarious than ever when further cutbacks were announced. These included a reduction of 173 jobs in the two Plymouth factories, affecting the cutting, stitching and making departments; nearly 100 job losses at the Barnstaple factory; 67 redundancies at Bushacre in Weston-super-Mare; a down-scaling at the K Shoes Askam factory in Cumbria, and the closure of Avalon Components in Castle Cary, where 89 people worked in last-making.
Walter Dickson’s forte was brand management. At Mars, he had come into contact with Larry Light, then chairman and CEO of the international division of Bates Worldwide, the advertising and communications agency. Light, a graduate of McGill University, had been responsible for all Mars Inc.’s advertising and brand promotion and was now to turn his hand to Clarks. During an intensive few months in early 1992, he presided over a number of management seminars, reportedly charging £5,000 a day for his labours.
The company was also paying considerable fees to McKinsey for consultancy services, prompting heated discussion on the board and among family shareholders about the company’s resolve to act upon recommendations going back as far as 1988.
Then, when it became apparent that the board was actively seeking approaches from potential outside investors, the mood soured further. One such approach came from two businessmen in Hong Kong, Li Ka-Shing and Chong Hok Shan, with whom Malcolm Cotton had had past dealings in the hope of setting up a joint venture to expand the brand into the Far East. Dickson was excited. China, three years on from the mass protests in Tiananmen Square, was increasingly flexing its economic muscle, with British companies scrambling to be part of the action.
Chong Hok Shan was connected to the Chung Nam Group, the watch and clock movement manufacturers. Perhaps more tantalising was the fact that Li Ka-Shing was one of the richest and most powerful men in the world, with huge interests in retailing.
It emerged that Li Ka-Shing and Chong Hok Shan would provide up to £40 million in cash in return for between 10 and 20 per cent of shares in C. & J. Clark Ltd. Lance Clark and the other dissenting voices on the board – including Richard Clark, Roger Pedder and Caroline Gould, who were dubbed the Gang of Four by some sections of the press – were furious about this development.
The situation came to a head in September 1992, when Clarks announced that an extraordinary general meeting (EGM) had been requested by the so-called Gang of Four and that it would be held on 16 October 1992 at Glastonbury Town Hall. The resolutions requiring a vote at that meeting called for the removal of both Dickson as chairman of C. & J. Clark Ltd, and Jim Power, one of the non-executive directors. It was proposed that they would be replaced by, respectively, Michael Markham, a businessman known to Lance, and Hugh Pym, Lance’s 32-year-old nephew, then a television news reporter with ITN based in Scotland.
In a letter to shareholders, the board – or, at least, a majority of the board – struck back, describing Dickson as ‘an agent of change whose record in brand marketing is well known, and whose leadership in developing the new strategy outlined in the 1991/92 Annual Report has been invaluable’. It went on to say that ‘these proposals represent another chapter, but no solution, to a long-running history of ownership, control and management issues which have bedevilled the Company for many years … Your board believes that the requisitionists’ proposals would:
• result in the loss of valuable, known talent and leadership to the Board and the Company;
• fail to provide the necessary balance on the Board required for the successful implementation of the business strategy of the Company outlined in the Annual Report;
• fail to add relevant experience to the Board;
• result in control of the Board by certain family groups without offering shareholders who wish to realise their investment the opportunity to sell their shares at a fair price.’
Included with the letter was an appendix in the form of a statement from Dickson and a separate statement from Power. The first was entitled ‘Resolution to remove me from the Board’, the second, ‘Resolution to remove me as a Director of the Company’. Dickson pointed out that in January 1992 he was offered an improved financial package tying him into Clarks until June 1994 and therefore it was absurd suddenly to seek his resignation.
Shortly after the sending of this letter, Clarks confirmed that discussions had opened with Electra Investment Trust, a venture capital group, which was keen to make a ‘friendly’ bid for the company, thought to be in the region of £100 million, or just over 125 pence a share.
‘The whole thing is tentative at the moment. We are not a contentious organisation,’ Michael Stoddart, chairman of Electra, told the Daily Telegraph on 4 October 1992. ‘We will not proceed if there is any opposition, but we expect to be able to offer support to the people who want to carry this deal out.’
The next day, the ‘requisitionists’ as they were called formally – the rebels, informally – wrote to all shareholders explaining their reasons for calling the EGM, as follows:
For some considerable time we have been greatly concerned about the Company’s performance and its future direction. We fully appreciate that such a measure is a recourse of last resort, and we would not be taking this action unless all other avenues to protect the interest of shareholders and employees had been exhausted. We have tried through Board representations and in meetings with the chairman to have our concerns addressed, but without success.
The letter quoted the McKinsey report of 1988 on improving the company’s performance: ‘Successful execution of this strategy should, on best estimate rather than optimistic assumptions, lead to returns on capital employed of just over 20 per cent by 1992’. But, the requisitionists said, ‘on 13 August 1992 the Company issued a profit warning. Clearly things have gone very wrong in C. &. J. Clark Ltd’.
On 9 October 1992 the board responded – and the tone was distinctly less polite:
The requisitionists want control but have no strategy … their use of the McKinsey strategy is farcical: McKinsey have stated that, if market conditions had not changed, the company would be on track … they [the rebels] have damaged the Company and disregarded the interests of shareholders. If they have done this as requisitionists, how would they behave if they controlled the Board?
The credentials of both Markham, who was 40, and Pym, who did not have a business background, were questioned, their experience contrasted with that of Dickson and Power. ‘What do Hugh Pym and Mr Markham add, other than Board control for the requisitionists?’ retorted the board. Markham had been described by the rebels as an ‘experienced businessman specialising in corporate turnaround’ who was involved in a ‘Special Project on running a group of leasing companies’. Supporters of Dickson and Power were forthright in their response:
Our difficulty is that the requisitionists have persistently refused to provide the Board with any details of his career or qualifications. This remains true to this day. What is his career history? What are his qualifications? What is the factual basis of this ‘outstanding record in corporate turnarounds?’ What has leasing to do with branded footwear? We wish to know, and so should you.
With the EGM scheduled and the voting forms printed, the requisitionists realised that the stakes were dangerously high. They had a change of heart. Rather than calling for a vote to oust Dickson and Power, the meeting at Glastonbury Town Hall would ask shareholders to agree to an adjournment, with a view to holding another meeting later. But there would still be a chance to debate the future of the company.
On the morning of the EGM, The Times reported that Markham had issued further details of his career. Since 1982, he had undertaken a number of projects for Banque Hunziker, a Swiss bank, and was currently engaged in restructuring Product Finance, a leasing subsidiary of DG Bank, for the Co-operative Banks of Germany. Perhaps more pertinently, The Times added that he had advised a group of rebel shareholders during an acrimonious eight-year battle for boardroom control at Southern Resources, an Australian gold-mining company. The rebels felt that although Markham did not have experience of the shoe business he had the expertise that was needed. They also felt his credentials were no less worthy than those of Dickson, who came to Clarks from a confectionery firm.
The Glastonbury meeting was open to the media. This was another late decision. Originally, John Clothier wanted it to be for the ears of shareholders only and asked Eric Dugmore, who worked for C. & J. Clark Properties, to find a firm that would search the premises for listening devices. Dugmore sought advice from a London company and was told that the sophistication of modern surveillance technology was such that it could be operated from outside the town hall. ‘I do not feel therefore it would be worthwhile having a search, at a considerable cost,’ he reported back to Clothier in a memo.
It was an overcast morning on Friday, 16 October 1992. Almost every seat in the 480-capacity hall was taken. On stage, the board sat behind a long table, with Caroline Gould at one end, Roger Pedder at the other. Judith Derbyshire, the company secretary (and daughter of Ralph Clark), occupied a seat behind the board, alongside Nigel Boardman, from the company’s solicitors, Slaughter & May. A photograph of the Queen looked down from one wall, a ticking clock from another.
Dickson tried to break the ice. ‘If we had sold tickets for this meeting we might have made a bit more money than we are making from shoes at the moment.’ There was a nervous titter. No one seemed in the mood for levity. After several minutes explaining the current state of trade, Dickson said there was full recognition that Clarks ‘products must be improved’ and that both sides realised the ‘marketability of shares is a pressing problem and has been a problem for some time’. Then he paused, before continuing, his voiced raised: ‘So how on earth have we managed to get into this contentious impasse?’
He outlined the key disputed areas over ownership and control, and then confirmed that on 18 September 1992 the board had received a letter from Colin Fisher – representing Electra – with a view to making an offer to shareholders. If the EGM agreed to an adjournment, that offer, and any others, would be considered in an orderly way over the next few months, leading up to the annual general meeting (AGM) in the spring. He proposed establishing a special bid committee, which, he stressed, would work in the interests of all shareholders and remain independent of any warring factions.
Then, before asking for a show of hands to agree or disagree on the adjournment, he opened the meeting for questions from the floor. There was no shortage of takers.
Frederick Terry, a former employee, pleaded with the board ‘not to be at one another’s throats’; Grant Bramwell, who had previously worked at K Shoes, said Clarks was in danger of becoming the ‘laughing stock of the shoe trade’; and Michael Fiennes, who had left Clarks to work with Ecco, said the meeting would not be happening if an ‘effective international strategy’ had been put in place fifteen years earlier. Specifically addressing the original resolutions, David Edwards, a shareholder married to John Clothier’s sister, poured scorn on Markham’s credentials.
Edwards ended by calling for Lance Clark’s resignation. Lance responded, chronicling the deterioration of company profits in the previous six years, which, he said, now valued shares at 90 pence. He added: ‘We were also concerned that the proposed investment of considerable sums of money behind the company’s brands was inappropriate until the quality of the shoes had been considerably improved and that it was a waste of money until that had been done.’ Lance welcomed the adjournment, but reminded the meeting that ‘as a major shareholder you inherit not only considerable advantages but a responsibility and a duty’ and that it was ‘wrong to sit back and do nothing’.
Daniel Clark, by this time the treasurer of Bristol University but still a non-executive director of Clarks, was seated next to his brother, Richard. He said:
… no company can run under a divided board and I think we have to realise that, whatever the outcome, if the resolutions before the EGM were voted, the board would remain divided. So what is the solution? The only one that I can see is that there must be a change in ownership and I have to say I am extremely sad to have to come to that conclusion. It is our business. I am the fifth generation of the family in the business and I know that many of you share that feeling. But we cannot live in the past.
Three away from Daniel was Pedder. He wished to speak and wanted to do so from the lectern in front of Dickson. Centre stage. Dickson moved behind into the second row. Pedder announced:
We have a situation where this company is not profitable, has declining profitability and we need to pull it up by its bootstraps. If I don’t see that happening then it is right I should object.
Then, in what amounted to a declaration of intent, Pedder said he had an independent track record in turning round another business and suggested that he was ‘the only one in this hall to have done that’. He added: ‘I believe you need a vigorous and entrepreneurial management.’
Following comments about the damage the meeting had caused to the morale of those who worked in the business, there was a show of hands in favour of the adjournment. The meeting was closed.
The Bid Committee that was formed to explore options for selling the company at the highest possible price was chaired by Jim Power. Its other members were Daniel Clark and Roger Pedder from within the company, and Sir Maurice Hodgson, the former chairman of ICI, and Andrew Laing, the managing director of Aberdeen Trust plc, from outside. Hodgson was a former chairman of the Civil Justice Review Advisory Committee reporting to the Lord Chancellor between 1985 and 1989 and was a serving member of the Council of Lloyds. Laing, aged 40, had experience as a commercial lawyer and had advised several private companies about their futures.
Dickson had warned at the October 1992 EGM that Clarks would experience a ‘dangerous’ six months while soliciting bids. His prediction was correct. For the year ending 31 January 1993, pre-tax profits were down by nearly a third to £19.7 million compared with £28.8 million twelve months earlier.
By the beginning of March 1993, three potential suitors had come forward: Electra Investment Trust, the company which had identified itself as an interested party prior to the October EGM; F. I. I., a rival shoe manufacturer, which made footwear for, among others, Marks & Spencer; and Berisford International plc, a properties and commodities group that was in the throes of rebuilding itself and actively seeking investment possibilities.
On 21 March 1993, Monty Sumray, chairman and managing director of F. I. I., went on record saying that his company would make a good fit with Clarks. ‘We are strong in more formal footwear and Clarks is strong in more casual shoes,’ he told the Sunday Times, confirming that the figure of £150 million was, more or less, common to all three bids.
Two days later, Clarks announced that Berisford had been selected as the party to proceed to the next stage of negotiations and that the two companies’ respective merchant bankers, Schroders and Baring Brothers, would begin working together to this end. Berisford’s due diligence investigations triggered six weeks of intense speculation as rival factions began preparing themselves for what would be Clarks’ ‘high noon’, an EGM on 7 May 1993 to decide the future ownership of the company.
Finding itself in the spotlight was not something that sat easily with Clarks, but both sides of the argument tried to conduct themselves with dignity. The Daily Telegraph said shortly after the news of Berisford’s intentions that ‘so far the Clarks boardroom has been as leak-proof as its shoes’.
Berisford became a public limited company in 1982 when it diversified from its commodity-and-food-based activities into property and financial services, achieved mainly by a high degree of leveraging. The property crash of the late 1980s and falling commodity prices had rocked Berisford and led to a refinancing package conditional upon a programme of disposals and cashing-in of assets.
John Sclater, a trustee of the Grosvenor Estate and a member of the Council of the Duchy of Lancaster, was appointed its chairman in March 1990. He oversaw the selling off of Berisford’s largest asset, British Sugar, for £880 million a year later.
The company’s chief executive, Alan Bowkett, who was 42, had only begun his job a few weeks before the proposed Clarks deal made it on to the negotiating table. Bowkett arrived from United Precision Industries Ltd, where he had led a management buy-in and where he oversaw a £200 million turnover, with 4,000 employees in ten countries.
Sclater wrote to Walter Dickson on 1 April 1993, assuring him that Berisford saw Clarks as a long-term core business and that ‘the sale or breakup’ of the company ‘forms no part’ of the plans. He said he hoped there would be as ‘few compulsory redundancies as possible, consistent with the need to improve the profitability of the business’. Twenty-four hours later, Kevin Crumplin circulated Sclater’s letter widely among Clarks employees and confirmed that the EGM on 7 May 1993 would be held at the Royal Bath & West Showground outside Shepton Mallet. Battle lines were drawn and within days a group of shareholders calling itself Shareholders Opposed to Enforced Sale (SHOES) had sprung into action, bringing together various strands of the family. It outlined its position in a letter to shareholders dated 7 April 1993:
It is important that our company is not sold at a low price which reflects the problems of the past, rather than the future potential … we believe that Clarks has a good future. Family ownership has proved responsible in the past and has considered the long-term view. The sale at this time and in this manner would seem to be short-sighted and destructive.
SHOES was careful not to exacerbate the rifts at board level, saying it recognised the effort that had gone into maintaining Clarks’ position through a difficult period. ‘Whatever differences there have been, they can and should be resolved by reasonable negotiation,’ but it warned that if the board persisted with a sale, ‘it will be essential to coordinate opposition’. The letter was signed by Harriet Hall, Stephen Clark’s daughter; Sarah Clark, Daniel and Richard’s sister; Charles Robertson and Benjamin Lovell, both grandsons of Roger Clark; and Hugh Pym, Lance’s nephew.
On 19 April 1993, an official 30-page document summarising Berisford’s proposals was sent to all shareholders, valuing ordinary shares at 239 pence, a price that was ‘fair and reasonable’, and confirming that if the resolution was defeated ‘there will be no transaction’, but that if the resolution was passed, Berisford would ‘in the absence of unforeseen circumstances, acquire Clarks’.
On page sixteen of the document, under the heading ‘Views of other Clarks Directors’, an open letter from Lance Clark, Richard Clark and Caroline Gould was printed in full. It made the point once again that with a strengthened management team and appropriate changes to the board, Clarks could turn itself around:
The problems that have faced the Company can and should be solved from within and this is in the best interests of shareholders, employees and the Company as a whole.
Roger Pedder, one of the so-called Gang of Four who initiated the eventful Extraordinary General Meeting of October 1992, later served as chairman of Clarks from 1993 to 2006.
Roger Pedder, the fourth member of the Gang of Four, chose not to put his name to this. Instead, his own personal statement was published, stressing that he believed the Berisford bid amounted to a ‘full and fair’ price for the company and that he was in favour of putting it before shareholders, but that, rather than recommend a particular course of action, he believed shareholders needed to weigh for themselves the prospects of remaining in private ownership against realising their investment.
SHOES addressed the problems that had beset the previous decade, and offered solutions. Firstly, the adoption of corporate governance within one year, so as to establish a clearer division of responsibilities between directors and shareholders, including fewer Clark family members on the board, and representing the interests of Clarks shareholders on an elected Shareholder Council with defined powers. Secondly, full implementation of the existing three-year plan. And thirdly, support for a public flotation of Clarks at a time to be determined by the board within five years, assuming the general economic conditions were favourable.
Pym took a month’s unpaid leave from ITN to campaign against the sale. Normally the one asking the questions, on 28 April 1993 he found himself in the interesting predicament of facing the media himself. ‘There is a Clarks alternative,’ he told the Daily Telegraph. ‘This is the implementation of a plan for a new board structure with a shareholder council. This, combined with a flotation, provides an inherently better structure on the road to success for Clarks.’
Berisford’s chief executive, Alan Bowkett, thought otherwise. ‘I see a shareholders’ council as a way of increasing conflict … the promise of a flotation is an empty promise,’ he told the same paper.
And so it continued. Almost every day in the run-up to Friday, 7 May 1993 there were stories in the press chronicling the twists and turns, the latest jibe from one side or the other.
The closer the vote came, the straighter the talking.
Flotation of the company within five years could not be contemplated, said the board, because institutional investors would not want to put their cash into a company ‘fraught with internal’ wranglings. SHOES then denounced Berisford as a ‘hotch-potch of small businesses, most of which are for sale’.
For almost two months, SHOES engaged the services of Bracher Rawlins, a London firm of solicitors, which in turn brought in Brian Coultas, a corporate finance adviser, to work on the campaign. One issue exercising the legal team was how the board had determined that only a 51 per cent majority would be required to win the vote, rather than 75 per cent, as some people had thought likely under the terms of Clarks’ articles of association. If the board were selling the company rather than the business then it would indeed have required 75 per cent of the vote.
‘We looked into this and went as far as instructing counsel, but it turned out that the 51 per cent ruling was perfectly legitimate for what the board was trying to do,’ says Alan Bracher, a partner at the firm.
A week before the EGM, senior staff gathered in the Orchard Room in Street to hear the Berisford people make their case. Dickson began proceedings by reminding everyone that Clarks had been damaged by ‘compromise and fudge’ and by a board that was divided. He said the situation had become ‘intolerable’. The Berisford bid was ‘fair and reasonable,’ and its board was ‘talented, seasoned and cohesive, which is more than we can unfortunately say about our recent board history at Clarks’. He added: ‘We have to change the ownership or stay where we are with all the tension.’ The response from the floor was more evenly balanced than at the Glastonbury meeting.
‘I understand what we can do for Berisford,’ said David Hillcox, head of children’s sales, ‘but I haven’t a clue what Berisford can do for us.’ Unlike at Glastonbury, Pedder did not wait until the end to speak. ‘I have tried to remain independent and I care as much as anyone,’ he said. ‘I don’t believe us to be weak. I don’t find dissent to be weak. It is not weak to point out the deficiencies of the company.’
Malcolm Cotton’s contribution made for a withering indictment of the recent past.
I have observed the total undermining of a very competent family chairman [Daniel Clark], the selection of a second chairman [Tindale] by the rebels who undermined him and attempted to remove him within a month of his arrival and I have seen another man, Walter Dickson, brought to public examination in Glastonbury Town Hall. The solution has to be clarity of ownership.
After nearly an hour, the Clarks board swapped places with the Berisford board to answer further questions. David Heeley asked Bowkett to explain his methods of working with a company such as Clarks, to which the potential in-coming chief executive responded with a story about visiting a businessman in Japan who told him to ‘get the software right’ before doing anything else. It was not a convincing contribution. At one point, the SHOES reaction to the take-over was discussed, prompting James Lupton, a member of the Berisford contingent, to say that the tone adopted by those against the sale was ‘disappointing’ and that the only concern he had was that Berisford ‘might be paying too much for Clarks’.
By now, the Clarks story was no longer confined to the business pages. ‘Out of Step’ ran a headline on 2 May 1993 in the Mail on Sunday, with the sub-head: ‘The bitter feud that threatens the rule of a family dynasty’. This unedifying double-page spread included a Clarks family tree with pen portraits going back to James Clark (1811–1906). It ended by saying that whatever happened on 7 May 1993, ‘the six-generation family dynasty is almost certain to lose control’.
Almost every other paper and media organisation came to the same conclusion. The Daily Telegraph predicted that Clarks’ fate would be the same as ‘the Lloyds and the Barclays, the Cadburys, Frys, Rowntrees’, all of whom had either gone public or been bought out. In an editorial, the paper said that Berisford’s ‘solution would allow a management to manage in a way that the existing shareholders have prevented, and brought the company to crisis. If the bid is rejected today, Clarks future looks grim.’ Ian Ritchie, Clarks’ long-standing company spokesman, was quoted by the Telegraph as saying: ‘One of the Quaker mottos is that pride is a sin and people who start shouting about themselves are going against that. It is very hurtful that this has gone into the public domain’.
It was a fresh, clear morning on Friday, 7 May 1993 as the gates to the Royal Bath & West Showground swung open. The meeting was held in the Showering Pavilion, named after the Showering family from Shepton Mallet who had founded the drinks company behind Babycham, the sparkling perry (‘I’d love a Babycham’) that had been popular in the 1960s and 1970s. A huge, cavernous building normally occupied by cattle during agricultural shows, the pavilion could easily seat 1,000 people. Television crews jostled for prime position, journalists bagged their places on fold-away chairs hired especially for the occasion. The last time Shepton Mallet had seen such excitement was when it was identified as the town supplying the silk for Queen Victoria’s wedding dress.
And the meeting was not the only significant event that day at the showground. In a hall next door, the police were holding a day of riot training for officers attending the forthcoming Glastonbury Music Festival.
Pym remembers arriving in the hall ‘quietly confident’ that the votes would go SHOES’ way. He had talked the night before to Harriet Hall, who had done her sums; she too was optimistic. Hall sat next to Alan Bracher, the solicitor. Richard Clark also had been working out who would vote which way – and was nervous. Pedder and his wife, Sibella, thought it too close to call. Sibella’s father, Bancroft, did not attend. Aged 91, he was confined to his wheelchair at home in Street. Prior to the meeting, a family member had distributed various quotations in response to the shareholders’ proxy votes. One of these was from Oscar Wilde’s The Ballad of Reading Gaol:
Yet each man kills the thing he loves.
By each let this be heard.
Some do it with a bitter look,
The coward does it with a kiss,
The brave man with a sword!
Dickson opened the meeting at 11 am by saying he had received a letter from a shareholder recommending he look at Proverbs, chapter 14, verse 1 (‘Wisdom builds her house, but folly with her own hands tears it down’). Dickson said he had taken the shareholder’s advice and suggested others might wish to do likewise. Then he outlined the position of the majority of the board and said it would be ‘tragic’ to turn down the Berisford offer. The meeting then went on to reveal the passionate commitment of family shareholders to the company, whichever side of the argument they were on.
Lance Clark articulated the well-rehearsed case against a sale and then accepted that in the past he had ‘made mistakes’ and been ‘clumsy’ in some of his protestations against the management of the company. He reiterated his total commitment to floating the company and then asked Richard Clark and Caroline Gould, two of the leading rebels, to make similar pledges. ‘I can completely agree with what you have said, Lance, and I commit myself,’ said Richard. ‘I have no hesitation in committing myself likewise,’ said Caroline.
Lance reminded the meeting that Britain was emerging from a deep recession and that Clarks was in a good position to prosper when the economic wind changed direction:
It is an idiotic time to sell, absolutely idiotic … you’ve got the best brands in the trade, you’ve got a strategy and a plan to deliver shareholder wealth. You’ve got the commitment to float so that you can realise that wealth as and when you want. Please do not hand that over to somebody else. I ask you passionately to reject the bid and keep Clarks independent.
Pedder spoke early, acknowledging that the price Berisford was offering was acceptable, but insisting it was not an offer he wanted to accept. Pauline Clark, Daniel’s wife, spoke forcefully about how those who wished to sell ‘cared passionately’ about Clarks, certainly just as passionately as those who wanted to keep the company in private hands.
The Daily Telegraph’s leader of that morning was bandied about at some length – and used by both sides. Dickson said he agreed with the prognosis that the future was ‘grim’ for Clarks if it did not accept the offer. Pym stressed the complete reverse:
A good deal for Berisford must by definition not be a good deal for us, that’s what deals are all about. I ask you to think hard about that, a good deal for them is not a good deal for us … I urge you very, very much to think hard along those lines and to reject this resolution.
There were some touching contributions from employees. Les Gay, who worked in the St Peters factory, said there were still people on the Clarks board who ‘know how to make a pair of shoes’, but that when he looked at the Berisford people he could see ‘no one that has any concept at all of what this industry is all about’. Gay added that he was due to retire in September and that ‘Mr Daniel has taken good care of my pension, but there is also the problem of the people’s jobs, and to be quite honest the old saying is, better the devil you know than the devil you don’t.’
John Clothier, the Clarks chief executive, stood by his earlier position that only a change of ownership could deliver an improved performance, while Daniel Clark questioned the rebels’ motives in changing their minds about offering shareholders a market for their shares by agreeing at the eleventh hour to a flotation:
It is only in this last week that this group has been willing to make that move … and they still say that they would have preferred to remain private, but they now recognise the overwhelming desire of shareholders to have a flotation. Now, why have they suddenly been converted that way? In my view, it is that they have become frightened.
Daniel finished by declaring how the alternative to a sale was ‘just too appalling to contemplate’.
Malcolm Cotton did not intend to speak. Reflecting on this, he says it was because he felt badly torn. ‘I did not like the Berisford people and I never thought it [selling] was the right thing for the business, but I believed it was the right thing for the shareholders. Emotionally I hated the idea. My support [for selling] was based on a cold, calculated look at the company.’ But he did speak, coaxed to his feet by Pedder, who wanted him to recall a conversation they’d had 24 hours earlier about Berisford’s visit to K Shoes in Kendal. Cotton queried whether it was relevant, but spoke about it anyway, saying that Berisford ‘had a lot to learn about a labour intensive industry’ and suggesting that Berisford ‘were surprised and perhaps a little awed by what is, in fact, required’.
Cotton did not then sit down, however. Instead, he spoke at length about why, after nearly 30 years at Clarks, he was exasperated and not convinced by SHOES’ ‘scanty’ plans. But he fell short of recommending a sale.
Please, if you decide to reject Berisford’s proposals, and it’s well within your power, and if that’s your decision we will work to make this company happen and grow as we want it to. But please make sure you deliver corporate governance, a proper council of shareholders and proper flotation. Otherwise, this will never end.
Richard Clark made a personal plea:
It has been said that we shouldn’t allow our hearts to rule our minds and I agree with that. But my heart is in this company. I live in Street. I want the company to prosper. I live in the house which James Clark [the founder] was born in and all descendants who are shareholders here today are descendants of his … I think it isn’t our hearts that we have to worry about, it’s our minds, and it’s our minds which have got to make up the judgement … I expect the bid to be voted down and I do not want to be called a rebel again.
It was now 1 pm. Dickson said it was time ‘to press on’. He formally proposed the resolution that Clarks be sold to Berisford International. Daniel Clark seconded the motion. Then, in accordance with Article 63 of the Articles of Association of the Company, voting began, supervised by National Westminster Registrars, with KPMG acting as scrutineers. The result would be declared at 3 pm.
For the next two hours, shareholders did their best to look relaxed. Some gathered in small groups and shared picnics in the spring sunshine. A reporter from the weekly Mid Somerset Series did the rounds with his notebook. One young Clarks employee told him: ‘The last time I was here was to watch Gary Glitter. This is as much theatre as that, I suppose.’
Shortly after 3 pm, the EGM resumed. ‘We have the results,’ said Dickson:
Total votes cast for the resolution: 34,115,455 – 47 per cent of the vote. Total votes against the resolution: 37,819,7818 – 52.57 per cent of the vote. Therefore, I declare that the resolution has been rejected. Thank you very much for attending. The meeting is now over. I wish everyone well.
