A major Headlam shareholder has launched an effort to oust the flooring distributor’s board, claiming it has overseen ‘years of persistent value destruction’ and lacks the skills to turnaround the group’s fortunes.
First Seagull, which owns just over 10% of the group, says ‘constructive shareholder dialogue has been met with resistance, serving only to insulate the board from criticism and genuine change. A full reset is required to give Headlam a chance to rebuild long-term relationships with customers, suppliers and employees.’
It has called for a general meeting to be held by 15 May, where a simple majority of shares will be required for First Seagull’s call to succeed or the board to remain in place.
As of 26 April, Headlam had a stock market valuation of about £22.5m. Its shares have lost 45% of their value in the past year; more than 90% in the past three years and almost 94% in the past five. In the past decade, the group’s shares have peaked at 654p in March 2017 and reached a new low of 28.1p last Friday.
‘It is disappointing that a more constructive resolution proved out of reach. I have been clear throughout that we believe we have the support required to pass these resolutions and the basis for this confidence will become clear as we approach the general meeting,’ Stian Husvaeg, md of the investment fund told Stephen Bird, who reverted from Headlam interim executive chairman to non-executive chairman this morning with Rob Barclay officially taking up his role as ceo.
‘The motivation is to put in place a more disciplined and capable board to drive the turnaround,’ says Husvaeg. He says he supports Barclay’s appointment and those of Wilf Walsh and Nick Kelsall as non-executive directors. Robin Williams, Headlam non-executive director is due to step down on 20 May.
In its explanatory statement requesting the general meeting, First Seagull says:
‘Since being appointed, this board has presided over the destruction of close to £400m or 95% of Headlam’s market value. Over the same period, the four directors collectively earned £1.4m in fees, while owning only £30,000 of Headlam shares today. This board approved and oversaw a strategy developed by external consultants and executed by leadership with limited flooring experience, that: (a) destroyed Headlam’s dominant market position by competing against core customers; (b) aggressively expanded its cost-base and exhausted capital; (c) structured incentives rewarding blind execution; (d) failed to take timely action to address underperformance; and (e) created a culture that suppresses dissent.
‘The result is a deeply dissatisfied customer base, deteriorating operational performance, frustrated and concerned suppliers, and a culture facilitating mediocrity.
‘While we welcome Rob Barclay’s appointment and the recently announced director changes, the board continues to lack the leadership, discipline, and turnaround experience the situation requires. Wasteful spending and failed engagement with key customers and suppliers in recent months underscore this. Meanwhile, the board continues to frame commercial blunders as strategic progress, as the window for a successful turnaround narrows.
‘Constructive shareholder dialogue has been met with resistance, serving only to insulate the board from criticism and genuine change. A full reset is required to give Headlam a chance to rebuild long-term relationships with customers, suppliers and employees.
‘1. Removal of Stephen Bird
‘Bird has served on the Board since 2021 and as Chair since 2025. His track-record at Videndum, where he presided over significant value destruction, is well documented. His tenure at Headlam has followed a similar pattern. Rather than welcoming shareholder engagement during a crisis, Bird has treated it as a threat to be managed, consistent with his culture of suppressing criticism. Proposals have been met with delays, opaque processes and a refusal to acknowledge shortcomings. Meanwhile, capital has been wasted on expensive external advisors and a suspended ERP project. Bird also decided to accept a £500,000 base compensation, an amount that cannot be justified for stepping in to address a mess he underwrote. At a time when Headlam’s financial capacity is severely limited, these resources should have gone toward rebuilding the organisation and restoring key relationships upon which Headlam’s business depends.
‘Headlam now needs a chair that has the discipline and experience to lead a turnaround. One self-assured enough to welcome industry experience and alternative perspectives to the table, and open to engaging constructively with employees, customers and suppliers. These are not optional qualities in a turnaround; they are preconditions. Bird has demonstrated none of them.
‘2. Removal of Jemima Bird
‘Bird has served as NED since 2022 and chairs the remuneration committee. Under her oversight, compensation has been misaligned with shareholder value, incentivising a failed strategy and approving Stephen Bird’s excessive compensation. While we recognise she has made efforts to step up in recent months, those efforts have been misdirected and expensive. Headlam would be better served by a director with turnaround and flooring experience at this critical juncture.
‘3. Removal of Karen Hubbard
‘Hubbard has served as NED since 2022 during a period of significant underperformance. Most recent executive role was CEO of Card Factory from 2016 until her abrupt departure in 2020, during which the share price fell 85% and the board had to undertake a substantial strategic reset. She brings no flooring or distribution experience. Going forward, every board seat must contribute and justify its cost.
‘4. Proposed Appointment: Andrea Davis
‘Davis has spent a decade at Investcorp Group as managing director of European Private Equity and head of strategy, overseeing operational improvements of UK companies. She has chaired and served on boards of businesses solving succession planning, supply chain restructurings, margin recovery and channel transformations. She combines executive operating experience with PE-grade discipline on governance, cost control and value creation. Her composed and strong leadership style is exactly what Headlam needs to restore confidence among customers, suppliers and investors.
‘5. Proposed Appointment: Stian Husvaeg
‘Husvaeg is the Managing Director of First Seagull, which specialises in investments in special situations and turnarounds. Previously, Husvaeg was a Partner at Cardo, with a focus on operational improvements and turnarounds. He holds an MBA from London Business School. Most importantly, Husvaeg represents one of Headlam’s largest shareholders, committing, bringing some ownership alignment that is entirely absent on the board today.
‘6. Support the appointment of Nick Kelsall and Wilf Walsh
‘We call on the board to appoint Nick Kelsall and Wilf Walsh as announced. If the board fails to do so, we will propose their appointments at the general meeting. Both bring extensive and relevant experience for Headlam’s transformation.
‘7. The urgency
‘Together, these appointments will materially strengthen Headlam’s board. Equally important, they will reset the internal culture and external relationships that have deteriorated under this current board. As part of that reset, we will help secure liquidity to resolve stock availability and fund reinvestment in the business. These funds will be available ahead of Headlam’s expanded and accelerated sale-and-leaseback programme. Rob Barclay and his team will be able to execute the turnaround without constraint and deliver for customers and suppliers sooner rather than later.
‘Headlam has an important role to play in the UK flooring market, supported by a dedicated and capable team of flooring professionals. Unlocking that potential and restoring Headlam’s reputation requires meaningful cultural and operational transformation. That begins at the top. We strongly urge shareholders to vote in favour.’
UPDATE: Headlam told shareholders this morning: ‘The board is confident that the recently refreshed board (including a new executive team and two new non-executive directors) has the right experience to implement the company’s strategy and turnaround, and is getting on with doing so at pace. The board also wishes to highlight the extensive engagement with its shareholders including FS over recent months and intention to maintain that dialogue.’
It urged shareholders to take no action.
