Resignation letter from Jim Davies, Nominet director, 20 January 2009
Dear Mr Gilbert
I hereby tender my resignation as a Director of Nominet UK with immediate effect. I regret having to resign; and I hope that the many members whose support enabled me to be appointed do not feel I am letting them down. However, the conduct of the Board is not something that I feel I have any prospect of influencing by reasoned debate; and it is certainly not something I wish to be associated with.
There are many reasons for my resignation, but the main one is exemplified by the recent approval by the rest of the Board of the LTIP executive bonus scheme, enabling the Chief Executive (Lesley Cowley) and the other senior executives to given a three year back-dated bonus of around half a million pounds – on top of their existing generous salaries and their annual PRP. To be making this payment in a not-for- profit company during the worst recession in living memory is, in my view, obscene. Nominet may be largely insulated from the current economic turmoil, due to its uniquely privileged position issuing all .uk domains, but to further reward the Chief Executive and others on profits that I believe flow directly from that monopoly is particularly inappropriate and I think it is a gross abuse of the company’s privileged position.
Even worse, you have done it secretly and without seeking the approval of the membership. To implement such a bonus scheme without membership authorisation is – as you know – contrary to the Combined Code of good corporate governance. Nominet purports to follow the Combined Code, but you have chosen not to in this case.
You are also aware of the independent legal advice that Angus Hanton and I obtained – which made it clear that this was a matter that should be put the members for authorisation at the next AGM before being implemented.
As you know, the Remuneration Committee that sets executive pay has been improperly constituted for some time – due to the fact that you (as Executive Chairman) sat on the Committee. It is also worth noting that Lesley Cowley routinely attended the meetings and (as I understand it) participated in discussions about the proposed LTIP, although she did not vote on it.
Certainly, I was not aware of the LTIP when I first joined the Board in May 2008; and it did not become an issue that was raised until Lesley Cowley returned to work in August. Likewise, much of what appeared to have been agreed in that three month period was subsequently overturned or sidelined, a process that was very frustrating when these were serious issues (such as what many see as the overcharging of British consumers and industry for their .uk domains) that needed dealing with.
I believe your contempt for the company’s constitution is demonstrated by the contract you entered into for the provision of your services as an Executive Chairman; when in fact it now seems clear that it was agreed between you and Lesley Cowley that you would be a de facto Non-Executive Chairman. As a consequence, your contract of engagement – which states that you are an Executive Director and Chairman – appears to have been a deliberate misrepresentation of the actual position. This arrangement is also contrary to Nominet’s Articles – something that you tried (and failed) to get altered at the first EGM in 2006.
A further case in point in relation to the management style at the head of Nominet is the way that you and Lesley Cowley dealt with Jay Daley as IT Director. As you know, he was very concerned about an email that Lesley Cowley sent immediately after the AGM, which revealed that she had advance knowledge of the AGM results. The email also indicated that she was so personally disappointed by the results that she felt unable to come into work for the rest of that week and to deal with the results on behalf of the company.
Jay Daley raised his concerns with a non-executive Director and in due course I became aware of it. I raised it with the company’s external legal advisers, since I had been advised that it could strengthen the company’s position in respect to any claim that Lesley Cowley might make at that time. However, rather than view this as proper conduct for a senior manager, you and the Chief Executive (on her return) chose to deal with it as a breach by him – notwithstanding the clear advice from Leading Counsel that Angus Hanton and I obtained to the contrary. As Counsel said, the way this was dealt with was unjustified and misconceived. As a consequence, the company has needlessly lost a valuable and very highly regarded member of the senior management team.
The points I have raised above also form an integral part of my defence to the specious claims that you and Lesley Cowley have brought against me in the company’s name. Over the years, you have allowed clear conflicts of interests to exist – most recently Gordon Dick’s involvement in the pre-AGM propaganda. Now you have levelled three false claims against me for alleged breaches and you have also sought outrageous undertakings – which were obviously aimed at preventing me from earning a legitimate living, despite the fact that you had specifically approved the nature of my work when Lesley Cowley was absent.
These claims are just a smokescreen and they will be vigorously defended. When they fail – and if you are still in situ – I trust the membership and other stakeholders will take the appropriate action against you and those on the Board who supported them.
Yours sincerely
Jim Davies
