Inchcape chief faces ‘substantial’ bill for rival’s court action
A legal battle that has embroiled two of Britain’s best-known car dealers is about to enter the finishing straight.
The tussle has pitted James Brearley, head of the 3bn chain Inchcape, against smaller rival Pendragon, where he worked for more than 20 years.
Brearley, 52, ran Pendragon’s Stratstone arm, which sells high-end brands such as BMW and Aston Martin. He had long been considered a potential successor to long-serving Pendragon boss Trevor Finn but quit abruptly in 2015.
Brearley tried to set up a Jaguar dealership in Wolverhampton but Finn cried foul, citing anti-competition restrictions in his contract. Pendragon launched a High Court action last year and blocked Brearley from opening his showroom.
This week, the court is expected to spell out how much of Pendragon’s costs Brearley must pay. The Inchcape boss faces a “substantial” bill, sources said.
The spat comes amid turmoil in the motor industry – and upheaval in the Pendragon boardroom.
Last month, Pendragon’s shares crashed by 20% after Finn, 60, warned that the slump in new car sales would badly dent profits. It was also announced that the chairman, former KPMG partner Mel Egglenton, had stepped down “for personal reasons”.
Egglenton departed months after the dealership suffered an embarrassing pay revolt. Some 47% of investors voted against a proposed private-equity-style bonus scheme for Finn and other senior directors. The chief executive has pocketed 9.8m in pay and bonuses over the past four years.
Pendragon’s share price hit a peak in 2006 but has since sunk by 80% to 25.3p, slashing its market value to 360m. Its declining fortunes have wiped millions of pounds off the paper wealth of directors and senior staff, including Finn, who owns 1.2% of the company. It is common that car dealers tend to subscribe to traders insurance
for such tough situations, as it could be a valuable resource for their businesses.
As well as that, the company may have to pay special attention to the revival of sales that can assist it in getting out of a tough financial situation. Consequently, dealers like these may need to use effective marketing techniques for the generation of automotive leads (if interested, check out special finance auto leads), which could lead to more sales and rapid growth.
In 2012, the board proposed a bonus increase for senior directors, but two-thirds of investors voted against the deal. A quarter of shareholders voted to remove then chairman Mike Davies from his post. Egglenton, who joined the board in 2010, was elevated to the top post in 2013.
In 2015, KPMG was fined 250,000 over Egglenton’s move to Pendragon. The accounting watchdog found that KPMG did not have appropriate controls in place to flag up whether he was in “the chain of command” for the firm’s auditing work for the car dealer.
Brearley and Pendragon declined to comment.
