Malin to review executive pay after shareholder revolt

Malin Corporation has bowed to shareholder pressure to review its executive pay plan, after it was rejected by almost 51 per cent of shareholders that voted on the matter at the life science investment firm's annual general meeting in Dublin on Wednesday.

"We note that some shareholders have raised concerns on the directors' remuneration report," Ian Curley, chairman of two months, said at the meeting. "The board have noted these and are conducting a review of the overall compensation framework of the company."

Institutional Shareholder Services (ISS), which advises large investors on corporate governance issues, had recommended that clients vote against the remuneration report. It said Malin’s award last year to two top executives of restricted stock that can be freed up over 23 months goes against “local market standards” of long-term incentive awards vesting no earlier than three years after being granted.

Out of sync

ISS also said the terms of the company’s executive director contracts entitling them to severance payments of two years’ salary and twice their prior-year bonus is also out of sync with what investors expect. Termination payments should be no more than 12 months’ salary, it said.

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Malin, whose shares have fallen by half since its March 2015 initial public offering (IPO) amid concerns over the company’s strategy and operating costs, said last week that it had identified four “core assets” in its portfolio of investments and that it would look to sell off some other assets as it sought to restore market confidence in its strategy. It also said its first-half operating costs fell 45 per cent on the year to €5 million.

The key investments are stakes in: Poseida Therapeutics, which is developing a treatment for bone marrow cancer; Immunocore, whose key pipeline product is an eye cancer drug; Kymab, which is working on a treatment of eczema; and Viamet, which focuses on antifungal products.

The value of this portfolio increased 20 per cent to €290 million over the course of the first half of 2018. However, the company’s other assets declined by €48 million in value to €116 million.

Core assets

"We began this company with a three- to five-year plan. We assembled a group of assets that had different characteristics, different risks. We're three years into that and we know where the winners are and we're focused on those core assets," chief executive Adrian Howd told reporters after the annual general meeting, which saw some 27 per cent of votes cast against his re-election.

Mr Howd said that the company may decide to remain involved in some of its other 12 main investments as it continues to review its portfolio ahead of an investor presentation – or what’s known as a capital markets day in London in November 8th.

The chief executive said the likely returns on its investments in two Dublin-based firms – healthcare apps developer 3D4Medical and injectable drugs company Altan – “are probably not of the magnitude” of Malin’s key four holdings. However, he said that his team is “working close with these companies”.