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The fashion company FNG is entering even more turbulent waters now that the CEO resigns. This happened abruptly at the shareholders’ meeting, where main shareholder Dieter Penninckx retaliated because Lembrechts did not want to speak with him.
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The shareholders’ meeting of the Belgian fashion group FNG ended abruptly on Wednesday. Seconds after the voting results were announced, CEO Paul Lembrechts announced his resignation. He did this because the shareholders did not want to approve his remuneration.
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“This rash poses a serious problem — if you would call it serious,” Lembrechts said. ‘As a shareholder you have the right not to approve this. But it is also my responsibility to draw my conclusions from that. If the vote shows that there is insufficient confidence to send a signal to the CEO in terms of remuneration, then I have little choice but to inform you that I will be resigning my mandate as director and CEO. I will take the necessary formal steps to that end today. I will respect the termination period of one month. This ends this meeting. I wish to thank everyone for being there.’
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The company is still controlled by the founders suspected of fraud Dieter Penninckx, Anja Maes and Manu Bracke. An attempt to diminish their power failed last May. It can be heard in the corridors that Penninckx, Maes and Bracke were not against the remuneration, but mainly wanted to take revenge for the fact that Lembrechts did not want to consult with the main shareholders. They also had no say in the remuneration policy.
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If the vote shows that there is insufficient confidence to send a signal to the CEO in terms of remuneration, then I have little choice but to inform you that I will be resigning my mandate as director and CEO.
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During the meeting – which was held digitally – the shareholders had already sent in a lot of questions about Lembrechts’ remuneration. FNG has drawn up the remuneration policy with the help of the consultant Deloitte. As CEO, Lembrechts earns 1,800 euros per day that he works for the company. According to FNG, Lembrechts works about 11 days a month for the company. The number of days may increase in the future, although – according to the company – there were no plans for this for the time being.
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Lembrechts was allowed to work for FNG for a maximum of 220 days a year. He could earn at most 396,000 euros per year.
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Starting next year, he would also have a chance to win a bonus of up to 20 percent of his annual salary every year. In addition, he could only receive an exceptional bonus of 80 percent of his annual salary next year.
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Struggle to Survive
For FNG, an even more uncertain period begins with the resignation of Lembrechts. Before the dismissal of Lembrechts, the company also fought for survival. FNG ran into difficulties after important parts, including the shoe store chain Brantano, went bankrupt in the summer of 2020.
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The company has to pay 100 million euros to the investment fund Nordic Capital. It wants to collect that money by partly selling its only remaining activity – the Scandinavian web store Ellos. Lembrechts was busy with that capital operation – probably an IPO.
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The capital review will probably not happen until next year, Lembrechts indicated on Wednesday. ‘We are looking at different options. One of these is an IPO. But right now, market conditions are tough for e-commerce companies. I refer to the canceled IPO of Coolblue. A solution will be found at the earliest in the spring of 2022.’ Lembrechts added a little later that he wanted a solution at the latest next year.
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The remuneration policy was not the only agenda item that the shareholders did not approve. They also did not want to grant discharge to the ex-drivers Roald Borré, Elke Kestens, Philippe Vandeurzen and Gino Van Ossel. They can therefore still be held responsible for their actions as directors. That’s important, because FNG itself is suspected of fraud by the investigating judge. It is not the first time that FNG directors requested discharge, but did not receive it.
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