Supergroup set for pay showdown

Fashion designer and retailer Supergroup has a chequered history and it does not look set to get any smoother as Pensions & Investment Research Consultants (PIRC), the activist shareholder group, has called on its members to oppose the group's proposed remuneration report and auditor appointment in its AGM on Tuesday.

Last year the company was bruised, but not beaten, when 15% of the register voted against its remuneration report and 18% against the re-election of management, including chief executive Julian Dunkerton.

This year PIRC once again particularly opposes the top brass's bonus structure, which it said is "excessive" and not "sufficiently challenging". PIRC is particularly galled that chief operating officer Susanne Given, who joined from John Lewis last year and earned £773,000 in the period ending April, which is not excessive compared to similar posts, should enjoy a guaranteed £350,000 bonus rather than being set an achievable target.

The activist organisation also objects to the reappointment of PricewaterhouseCoopers as auditor, on the basis that total non-audit fees came to around a third of total audit fees during the year, which could create potential conflicts of interest.

The board's influence over the company's shareholdings has been diminishing as one by one the founders sell down their holdings. Co-founder Theo Karpathios left last year just before the AGM taking with him a £300,000 pay-off - his contractual base salary entitlement to the penny - amid rumours that bloated bonuses were a bone of contention.

In July another co-founder, James Holder, sold two million shares at 1,011p, citing recent divorce proceedings, but analysts were sceptical that he needed the whole £20 million to pay off his former wife, believing he was using the opportunity to take some profits. The shares have after all nearly doubled since the start of the year, and now trade at over 20 times current-year earnings.

Supergroup has also been trying to become more professional, taking on Shaun Wills as finance director to replace a predecessor who famously mistook a minus for a plus sign; and Hans Schmitt, who joined from Hugo Boss, to build an international presence where there could be considerable potential. The company is eyeing China where there is little by way of branded clothing competition.

First-quarter results on Thursday were ahead of analysts' forecasts, as ladies fashion drove sales growth of 26% to £75 million, with retail up 18% and wholesale climbing 51%.

One of the clothing retailer's strengths is that it rarely discounts, and its expansion has not been too hasty. It has only 28 retail stores in Europe compared to its branded clothing rivals, which have estates that are typically 15-30 times larger, but it recently bought a Spanish distributor for €2.3 million (£1.9 million) and is entering the growing Turkish market through a partnership with local player Demsa Group.

The AGM takes place at 11.30 BST at The Cheltenham Ladies' College, Bayshill Road, Cheltenham, Gloucestershire, GL50 3EP.

PIRC has also accused Mulberry of "serious governance failure" for not putting its pay report to a vote at its annual meeting last week. Although the luxury retailer as an AIM-listed group was not obliged to present a remuneration report, it is considered best practice.