The biggest shareholder in funeral provider Dignity has launched an attempt to oust the company’s executive chairman as its share price remains squeezed.
A fund managed by Phoenix Asset Management Partners has asked for a vote on the future of the chairmanship, proposing its own founder and chief investment officer, Gary Channon, to replace Clive Whiley.
Dignity said it would respond to the request “in due course”, and urged shareholders not to make any commitments to Phoenix until the board had spoken.
It is unclear what has riled Phoenix about Mr Whiley’s leadership – the asset manager declined to talk about the request – but the company’s share price has been struggling for several years.
It has been hit by a Competition and Markets Authority investigation into the funeral sector, which started in 2018.
Last December the CMA concluded that funerals were costing consumers too much, and made a series of recommendations.
After taking a 5% stake at the start of 2018, Phoenix went on a buying spree for the company’s shares between October that year and April 2019, taking its stake to nearly 27%.
It bought more shares in April and May last year.
It means Phoenix, which now owns 29.9% of Dignity, was not a major investor during the heyday of the funeral provider’s share price, before the CMA set its sights on the sector.
Shares are trading at less than a fifth of their 2016 peak, but are only marginally below early 2019 levels, when Mr Channon was building his stake in the company.
Mr Whiley was appointed chairman on Mr Channon’s watch. He faced criticism at the time for taking the job while also chairing Mothercare, whose UK arm collapsed shortly after.
Dignity is set to present its annual results next week, but is unlikely to report a benefit from increased funeral demand sparked by Covid-19.
During the past year, funerals have been stripped back, meaning the average price paid by friends and relatives to bury their loved ones has declined.
Dignity has also said high levels of deaths during 2020 are likely to mean lower numbers in coming years, which will reduce demand.