30-year family feud at U.K. firm leads to court ruling

A High Court of London judge has ruled that five family members who between them own 61% of CF Booth Ltd., a metal recycling company in Rotherham, South Yorkshire, were overpaid while their relatives who hold a minority stake did not receive dividends, the Yorkshire Post reported.

The feud between the two family factions has been brewing for 30 years and was rooted in “bad blood” between Ken Booth Sr. and Dennis Booth, the sons of founder Clarence Booth, who died in 1980, the article said.

Judge Mark Anderson ruled that the minority owners -- third-generation members Don Booth, Charles Wilkinson and Jane Compton, who own a combined 27% of the company, must be bought out. The court found that the majority owners -- third-generation members Ken and James Booth and Ken’s sons Scott and Jason -- had “taken excessive remuneration,” the article said.

No dividends had been paid to Dennis’s son Don, who owns 19% of the company, or Charles and Jane, who own 8.4%, since the mid-1980s, the Yorkshire Post reported. The minority shareholders claimed the refusal to pay dividends was a strategy to devalue their shareholdings “with a view to acquiring them cheaply,” the article said.

The majority owners said the no-dividend policy was instituted in order to reinvest profits and conserve cash. Though the judge said he accepted that the company used some of its profits for investment, the yacht and the cars were “inconsistent with Ken Booth’s claim that the no-dividend policy was justified by the company’s insatiable need for cash,” according to the report.

In 2015, directors’ pay and benefits rose from about £1.4 million to nearly £2.5 million, although the company lost £5.3 million, the article reported. That amount was lowered in 2016.

CF Booth, founded nearly 100 years ago as a scrap-metal trader, is now one of Europe’s largest independent recycling companies, the article said. Over the years, the company diversified into engineering, demolition, hauling and foundry products, the report said.

“The judge said total directors’ pay was modest until 2005 but then rose sharply to an average of over £1.5 million between 2007 and 2015,” the article said. Citing court testimony, the article said the company had bought luxury cars and a £1.73 million yacht.

A fifth director was not part of the litigation, the article said.

In 2012, turnover at the company was more than £273 million. But in 2014, the company sustained a loss of more than £4.5 million, the report said.

The judge ruled that Don, Charles and Jane should be bought out of their share, with the company valued as it was in July 2015. The payouts will be reduced by one-third to account for the minority stake, the article said.  (Source: Yorkshire Post, March 15, 2017.)