Vodka row at Stock Spirits spills over with fresh shareholder attack

Stock Spirits

One of Portugal’s richest men has attacked huge payouts handed to the bosses of vodka maker Stock Spirits as a row between the pair intensifies.

Western Gate, the investment firm of retail tycoon Luis Amaral, has written to investors in Stock Spirits urging them to back an unprecedented demand for the firm to pay a special dividend to shareholders. Mr Amaral claims that profits are not being fairly shared around.

The three-and-a-half page letter, a copy of which has been seen by The Daily Telegraph, says Stock Spirits is blighted by a “culture which seeks to reward management without recognising the modest performance of the underlying business”.

Stock Spirits - owner of a number of Central European vodka and gin brands - is recommending investors reject the non-binding resolution put forward by Western Gate, which owns 10pc of the company.

The firm said paying out a special dividend would hold back its ability to grow.

Pay among the company's top executives has swelled by 133pc between 2015 and 2019, compared with total shareholder returns of less than 20pc. Boss Mirek Stachowicz was paid €2.3m (£2m) last year.

Western Gate compared the figures with those of rivals such as Pernod Ricard, where pay swelled by 90pc, roughly the same as the returns realised by its shareholders.

The activist investor slammed Stock Spirits’ deal-making record, saying  the company has spent €47.5m on three takeovers since 2015. Two of these were in non-core markets, it said.

The letter said: “As it stands [investors] are stuck waiting for the acquisitions undertaken to deliver returns in 2023; this is unacceptable." 

Mr Amaral amassed an estimated fortune of more than €530m through his central and eastern European retail empire Eurocash. The business is thought to be one of Stock Spirits’ biggest customers. 

Western Gate spearheaded the ousting of former chief executive Chris Heath in 2016 after a long battle. It plans to vote against chairman David Maloney at an annual shareholder meeting on Feb 6. It voted against Mr Maloney last year.

Stock Spirits has enraged Western Gate, its second-biggest investor, by refusing to acquiesce to its demands even if the vote is carried with a majority.

Western Gate argues that Stock Spirits could afford a special dividend because it has low levels of debt.

Its letter said: “Given the lack of meaningful progress in acquiring profitable assets since 2015, there is a case for the company to reward shareholders’ patience and to re-set the capital structure."

A Stock Spirits spokesman said: “We have a strategy of both organic and merger and acquisition-driven growth which, as our recent full year results show, is driving a strong financial performance and is enabling us to pay consistently increasing dividends in line with our stated dividend policy.

"There is nothing erratic about this policy. As we have consistently said, we continue to assess a range of more meaningful and value-creating merger and acquisition opportunities in both existing and new categories and markets, but if such opportunities are not realised then we will of course consider making additional shareholder distributions.

“It is our view that payment of a special dividend now would act as a significant constraint on our ability to execute on our strategy, which we firmly believe is the best way of improving returns for our shareholders.”

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