by Mark Palmer
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 in
cluded 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 t
hat 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.
12
Shoes for ‘Mr and Mrs Made It’
THERE WERE NO RECRIMINATIONS. No gloating from the winners, no sulking from the losers. Polite handshakes were exchanged between rivals on the board. Barings, the merchant bank representing Berisford, issued a short statement expressing its regrets, and Alan Bowkett said he was ‘saddened’ by events. Walter Dickson promised that the board would ‘work towards achieving agreement on how best to take advantage of the great strengths of its [Clarks] brands’. On a personal level, he would consider his position.
Hugh Pym’s wife, Susan, was in tears. Harriet Hall simply turned to Alan Bracher, the SHOES group’s legal adviser, and said, ‘I’m going to give you a kiss, Alan.’