Shaw Faces Heat From Dissident Shareholders Over Jim Shaw’s $25.5M Payout

by Gaurav Kheterpal on December 19, 2011

Year 2011 has been a mixed bag for Shaw. Though it posted better-than-expected third-quarter earnings and revenue, its profits dipped significantly in the fourth-quarter, reflecting a wider loss from discontinued wireless operations, despite a 26 percent growth in revenues.

Overall, Shaw offered a cautious outlook for the 2012 fiscal year stating that it expects revenue to grow but cash flow to decline “somewhat.” Needless to say, the shareholders aren’t amused. Most investors were caught on the wrong foot in September when Shaw dropped its plans for a wireless telephone network and instead announced that it would build a cheaper Wi-Fi service.

To make matters worse, Shaw is now facing growing shareholder dissident over the $25.5-million payment made former CEO Jim Shaw. This is above and beyond the $625,000 in salary that he received in fiscal 2011. To put things in perspective, Shaw’s share price has declined 8.35% in the past three years and surely it’s a matter of time before the company’s shareholders lose their patience.

In fact, it’s not just about Jim Shaw, questions are now being asked over the hefty compensation packages doled out to various other members of the Shaw family. Bradley Shaw, how succeeded Jim as the Shaw CEO had a lucrative pay packet of $15.8 million, marginally below executive chairman J.R. Shaw’s $16 million haul. All in all, the three Shaws alone earned $58.6 million reflecting how Western Canada’s largest cable and broadband provider is still all-in-the-family affair.

In the past, shareholders haven’t cried foul as the stock price produced handsome returns. However, I have no doubt that 2012 will be a testing times for the company as it faces fierce competition from Telus and Bell. Earlier this month, Rogers and BCE purchased a majority stake in Maple Leaf Sports and Entertainment from the Ontario Teachers’ Pension Plan for about $1 billion. The two wireless giants now own 37.5% of Canada’s largest sports conglomerate and there’s no doubt the deal is likely to put Shaw under pressure in the race for prime time content.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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