The shareholders meeting of Belgian fashion group FNG ended abruptly on Wednesday morning: CEO Paul Lembrechts resigned after his remuneration was rejected. The future of the company is now highly uncertain.
FNG, formerly the owner of Brantano, Miss Etam and CKS, is fighting for its survival and hopes to continue operations with the Scandinavian webshop Ellos. However, the company's chances of survival suddenly seem smaller, now that the shareholders meeting ended in chaos. CEO Lembrechts unexpectedly announced his resignation after the shareholders refused to approve his remuneration, Belgian newspaper De Tijd reports.
"If the vote shows that there is insufficient trust to send a signal to the CEO in terms of remuneration, then there is little left for me to do but to inform you here and now that I will resign as director and CEO", Lembrechts allegedly said. The chief executive will respect the one-month notice period.
According to information from De Tijd, Lembrechts would earn 1,800 euros per day at FNG. In theory, he worked eleven days per month at the company but could increase that in the future, up to an annual limit of 220 days. That means a salary limit of 396,000 euros annually, which can be almost doubled by bonuses. Last year, for example, he received a success bonus of 200,000 euros for reaching a deal with creditor Nordic Capital.
IPO is uncertain
The CEO had been recruited to save what was left of the former fashion empire after it went bankrupt in the summer of 2020. Webshop Ellos is successful and growing strongly, but FNG still has to pay 100 million euros to the previous owner, Nordic Capital. That money was probably supposed to come from an IPO, but it is unclear what will happen with it now.
In a press release, FNG announced that another important agenda item was not approved either. It concerns the authorisation to buy back shares, which the board of directors had requested. FNG wanted to buy back 1.4 million of its own shares, which it had used to partly finance the acquisition of Ellos in 2019. That buyback of shares was part of the deal Lembrechts had reached with Nordic Capital, but the consequence of today's vote could have unpleasant effects in that regard.
The problem is that FNG is still controlled by founders Dieter Penninckx, Anja Maes and Manu Bracke. They are accused of fraud, but top executive Penninckx recently announced that he would oppose the accusations legally.