Lakestreet Demands Overhaul at Palace Capital Amidst Remuneration Concerns

Lakestreet Capital Partners AG, Palace Capital's (LON: CPA) largest shareholder with a 22.53% stake, has requisitioned a general meeting to oust Chairman Steven Owen and appoint its own founders as directors, citing concerns over excessive remuneration and value destruction.

The move comes after Lakestreet voiced strong objections to Owen's compensation relative to the company's performance.

Lakestreet highlights that the current cost of the two-person board consumes approximately 22.75% of the net property income from Palace Capital's remaining Newcastle and Northampton properties. This substantial overhead raises concerns about efficient resource allocation.

The firm stated that for the past four years, Owen has received around £220,000 annually as Chairman, a figure Lakestreet considers excessive, especially when compared to the £195,000 paid to the previous five-person board.

Moreover, they add that Owen is projected to receive up to £720,000 this financial year, boosted by the reallocation of Short Term Incentive Plan (STIP) units. This represents a threefold increase from the previous year's compensation.

Lakestreet also points out Owen's 12-month notice period, which guarantees him another £220,000 even after the asset realization strategy concludes. Adding to the concern, Owen does not hold any shares in Palace Capital, creating a misalignment of interests, the markets noted.

Lakestreet suspects that Owen extended the financial year to delay remuneration disclosure and postpone the AGM, potentially entrenching his position. They further note that Owen received significant “NO” and “ABSTAIN” votes at the past three AGMs.

Lakestreet is confident it can accelerate asset sales, cut unnecessary costs, and deliver greater shareholder returns. Their proposed directors will not take a fee for their work, aligning their interests with shareholders.

Lakestreet intends to complement tender offers with share buybacks to protect Palace Capital's net asset value (NAV) per share. They also believe shareholders can benefit from the potential value of Palace Capital as a shell company after asset sales.

Lakestreet has set conditions for rescinding the requisition, including a reduced fee for Owen, waiver of his notice period, purchase of Palace Capital shares with his £720,000 remuneration, reverting to the original financial year end, holding an AGM no later than June 2026, and initiating on-market share purchases.

Christian Kappelhoff-Wulff, CEO of Lakestreet, stated, “There is a striking disconnect between the interests of Steven Owen versus the interests of shareholders in Palace Capital. Steven Owen receives excessive remuneration while not owning a single share in Palace Capital… the only way for Lakestreet to benefit, is if all shareholders benefit.”