There's nothing wrong with providing dividends to your shareholders. But why is GW so fixated on them to the exclusion of growing the business? Back in the heady days of 2003 to 2006, when the Lord of the Ring movies were a miniatures goldmine for GW, they were actually BORROWING MONEY to provide higher dividends than they normally could, even with record profits. Which is why they were in so much debt until last year. So what's up with that?


Tom Kirby, that's what.

If you do a little digging into GW's financials, you'll find that Kirby is the 5th largest GW shareholder. Of the roughly 31 Million shares of GW that are floating around, Kirby owns a little more than 1.9 million of them. Or about 6.1% of the entire company. The next highest number of employee shares belongs to C J Myatt, at 66,500. Or 0.2% of the company. So when GW announces a quarterly dividend of 20p, that translates into a cool £380,000 directly into Kirby's pocket. Or £1.52M annually. His base salary is £392,000.

What then, is Tom Kirby's interest in GW? At 60 years of age, does he want to put the company's excess cash into investments that will pay off after he retires? Is he going to have a real desire to do any of the following?

1) Implement a proper internet strategy. Including online rules subscriptions, army building, and beta testing software; with integrated data mining features and support for emerging devices like tablet computers, augmented reality, and tabletop graphics displays with touch interfaces.

2) Diversify GW's in-house production into video gaming and other growing entertainment media to offset the overall decline in tabletop wargaming. Much as Marvel and DC have used their recent profit windfalls to finance their own movies and television productions based on their IP.

3) Put the R&D cash into finding a way to offer low cost pre-painted miniatures that don't suck. So that the tabletop hobby can grow again.

4) Start the R&D required to adapt GW's business model to the future reality of cheap, accessible 3D scanning and printing - in color. It's coming.

No, he's not going to willingly do any of that. Because his incentives are clear. Cut costs, raise prices, and sacrifice growth to put as much cash into paying out dividends as he thinks he can get away with. At least until he retires with a golden parachute a few months before GW collapses into bankruptcy and is sold off for parts.

That's my opinion. Sure, it's GW's right to do all of this. But it's bad business and bad for the hobby we all love.

Chibi Bodge-Battle wrote:IIRC the majority of shares are on the hands of trust funds.
The second largest belong to certain members of Dakka Dakka

Still have to agree with Howard as a potential conflict of interests

Howard A Treesong wrote:It's definitely been raised before but people need to know how the company is being run. Unfortunately GW isn't alone in being run this way, it's an entirely unhealthy conflict of interest IMO in any company especially when determining dividend payouts.

Howard A Treesong wrote:It's not so much the fact he owns stock, it's that the company is putting the payment of dividends over shoring the company up. Can it be correct that even when making large profits from LOTR they were borrowing to pay larger dividends? That's effectively borrowing money based on your company's assets to pay directly into your pocket. It's not like he will have to pay that back if he leaves and the company implodes.

MeanGreenStompa wrote:Found this, think it's worth a read, it raises a strong point.

http://theback40k.blogspot.com/2011/04/help-kirby-is-eating-our-hobby.html

There's nothing wrong with providing dividends to your shareholders. But why is GW so fixated on them to the exclusion of growing the business? Back in the heady days of 2003 to 2006, when the Lord of the Ring movies were a miniatures goldmine for GW, they were actually BORROWING MONEY to provide higher dividends than they normally could, even with record profits. Which is why they were in so much debt until last year. So what's up with that?


Tom Kirby, that's what.

If you do a little digging into GW's financials, you'll find that Kirby is the 5th largest GW shareholder. Of the roughly 31 Million shares of GW that are floating around, Kirby owns a little more than 1.9 million of them. Or about 6.1% of the entire company. The next highest number of employee shares belongs to C J Myatt, at 66,500. Or 0.2% of the company. So when GW announces a quarterly dividend of 20p, that translates into a cool £380,000 directly into Kirby's pocket. Or £1.52M annually. His base salary is £392,000.

What then, is Tom Kirby's interest in GW? At 60 years of age, does he want to put the company's excess cash into investments that will pay off after he retires? Is he going to have a real desire to do any of the following?

1) Implement a proper internet strategy. Including online rules subscriptions, army building, and beta testing software; with integrated data mining features and support for emerging devices like tablet computers, augmented reality, and tabletop graphics displays with touch interfaces.

2) Diversify GW's in-house production into video gaming and other growing entertainment media to offset the overall decline in tabletop wargaming. Much as Marvel and DC have used their recent profit windfalls to finance their own movies and television productions based on their IP.

3) Put the R&D cash into finding a way to offer low cost pre-painted miniatures that don't suck. So that the tabletop hobby can grow again.

4) Start the R&D required to adapt GW's business model to the future reality of cheap, accessible 3D scanning and printing - in color. It's coming.

No, he's not going to willingly do any of that. Because his incentives are clear. Cut costs, raise prices, and sacrifice growth to put as much cash into paying out dividends as he thinks he can get away with. At least until he retires with a golden parachute a few months before GW collapses into bankruptcy and is sold off for parts.

That's my opinion. Sure, it's GW's right to do all of this. But it's bad business and bad for the hobby we all love.

I wonder how healthy the company's long term future is, when it's aged CEO is financing his rapidly approaching retirement with the short term profits of the price hikes/Oz punishing and finecost fiasco?

Howard A Treesong wrote:It's not so much the fact he owns stock, it's that the company is putting the payment of dividends over shoring the company up.

Mr. Burning wrote:Lack of transparency on CHS VS GW case - Rage.
Lack of transparency on Future GW releases - Rage.
Transparency on employees ownership of GW stock - Rage?

Kirbys shareholding can hardly be cause for a major freakout can it?

alphaomega wrote:He could retire and hang on to his shares. Meaning that as long as GW is about he will have a dividend.

Backfire wrote:Whether surplus money should be paid out as dividends or reinvested to the company is an age-old question: but I believe GW has been paying dividend, because after the LotR bubble burst, they had they pretty rough time with the investors when promised growth failed to materialize, so they are probably trying to soothe out the investors. Paying dividend will have positive effect on price of the company stock.

sarpedons-right-hand wrote:This is not really that shocking is it? Heads of major companies, and I'm talking about Barclays Bank and the such, get paid massive amounts even if they fail in their remit.

SilverMK2 wrote:
I'm pretty sure that on the last financial report they made somewhere in the region of £15m and paid out over £16m in dividends. I'm more than happy to be corrected on this because if it is true, that is just wrong. There is so much investment that GW could make with that money.

mikhaila wrote:

Looking at some of these things again, I'm really not feeling any bit of concern that GW isn't gung ho to push into them.

1) Implement a proper internet strategy. Including online rules subscriptions, army building, and beta testing software; with integrated data mining features and support for emerging devices like tablet computers, augmented reality, and tabletop graphics displays with touch interfaces.

I see a lot of technology buzzwords. I also sort of think this guy wants technology that isn't available yet. And why the hell should GW be pushing forward on technology like this? They don't make one thing that even uses electricity.)

mikhaila wrote:

2) Diversify GW's in-house production into video gaming and other growing entertainment media to offset the overall decline in tabletop wargaming. Much as Marvel and DC have used their recent profit windfalls to finance their own movies and television productions based on their IP.

Marvel and DC aren't doing this. Disney and Warner brothers are. Again, GW is not a video game producer. They tried it with the first version of Warhammer Online, and quickly realized it wasn't where they should be going. Target games wasted millions on a Warzone video game, and it cost them. I'd be happier if GW sticks to what they are good at.

mikhaila wrote:

3) Put the R&D cash into finding a way to offer low cost pre-painted miniatures that don't suck. So that the tabletop hobby can grow again.

Screw this. We have heroclix, had heroscape, arcane legions, Dungeons and Dragons, and a host of other pre-paints. HAD. Lots of ongoing problems with pre-paints, mostly due to the production in china of them.

mikhaila wrote:
4) Start the R&D required to adapt GW's business model to the future reality of cheap, accessible 3D scanning and printing - in color. It's coming.

Yep, and when I want a badly sculpted paper mache orc that costs way too much money, I'll let you know. The whole 3-D printing thing pops up about once a week.

mikhaila wrote:
This whole list is fairly idiotic to me, as it takes the company in directions it has no reason to go, abandoning more of it's core market, and delving into projects that have bankrupted other companies. Sill, silly, stuff.

Shareholder statistics
The shareholders who hold over 3% of the total ordinary share capital of Games Workshop Group PLC, are as follows:

Shareholder Number of shares Percentage
The Nomad Investment Partnership LP 7,074,887 22.7
Investec Asset Management Limited 5,768,410 18.5
Phoenix Asset Management Partners Limited 4,190,607 13.4
Tom Kirby 1,938,394 6.2
Polar Capital Partners 1,162,220 3.7
Quantum Partners LP 1,058,000 3.4

Information correct at 8 August 2011

SilverMK2 wrote:I'm pretty sure that on the last financial report they made somewhere in the region of £15m and paid out over £16m in dividends. I'm more than happy to be corrected on this because if it is true, that is just wrong. There is so much investment that GW could make with that money.

Kroothawk wrote:It is £ 15.3m operating profit and £ 19.67m dividends, so draining the company of £ 4.37m. Wells decided a 15% pay rise for Kirby and over a million £ dividends for Kirby (860,854 £ plus another suggested 382,601 £), and Kirby approved this.

Kanluwen wrote:I am shocked that Kirby's puppet....er, Mark Wells approved a pay raise for Kirby.

Shocked I say!

Jape wrote:This is probably dumb before I even type it, but if people are so annoyed by the way profit is given away, why not organise a Customer Trust and buy shares en masse? A couple of thousand people shelling out the amount for a normal 10 man boxset would make a sizeable base to grow from, and then you could have a say in the PLC.

Plus even if such a Trust lacked major de jure clout, the fanbase having an official voice might creature some pressure if popular grievances are raised.

Kroothawk wrote:

SilverMK2 wrote:I'm pretty sure that on the last financial report they made somewhere in the region of £15m and paid out over £16m in dividends. I'm more than happy to be corrected on this because if it is true, that is just wrong. There is so much investment that GW could make with that money.

It is £ 15.3m operating profit and £ 19.67m dividends, so draining the company of £ 4.37m.

MeanGreenStompa wrote:Hey Mike, I'll just respond on those points. My post was more about the revelation that Kirby has a sizeable sharehold and that does allude to potential answers to some questions I had about their recent behaviour.

mikhaila wrote:

Looking at some of these things again, I'm really not feeling any bit of concern that GW isn't gung ho to push into them.

1) Implement a proper internet strategy. Including online rules subscriptions, army building, and beta testing software; with integrated data mining features and support for emerging devices like tablet computers, augmented reality, and tabletop graphics displays with touch interfaces.

I see a lot of technology buzzwords. I also sort of think this guy wants technology that isn't available yet. And why the hell should GW be pushing forward on technology like this? They don't make one thing that even uses electricity.)

Apps, I-pads, Army builder, Iphones, The Internet...

Successive generations of kids are just going to be more and more IT savvy (or reliant...) and GW seems to be almost phobic about the web. Why the hell are they still pushing white dwarf and not just releasing it as a pdf or something? Why don't they have legal computerised codices yet? Building army lists on your iphone whilst stuck on the train seems like a great idea to me.

FAQs could be updated straight to the virtual codex.

mikhaila wrote:

2) Diversify GW's in-house production into video gaming and other growing entertainment media to offset the overall decline in tabletop wargaming. Much as Marvel and DC have used their recent profit windfalls to finance their own movies and television productions based on their IP.

Marvel and DC aren't doing this. Disney and Warner brothers are. Again, GW is not a video game producer. They tried it with the first version of Warhammer Online, and quickly realized it wasn't where they should be going. Target games wasted millions on a Warzone video game, and it cost them. I'd be happier if GW sticks to what they are good at.

Entirely agree, licensing out that IP does seem to be working well (despite WAR being a colossal flop) as I recall picking up a copy of PC Gamer and about half the magazine was tailored to Games Workshop IP, with Dawn of War 2, Space Marine, WAR, the forthcoming 40k mmo etc etc. Keeping out of the business and hiring out the IP is going to give you a small amount of money with little risk... No big bucks though. Sensible and conservative.

mikhaila wrote:

3) Put the R&D cash into finding a way to offer low cost pre-painted miniatures that don't suck. So that the tabletop hobby can grow again.

Screw this. We have heroclix, had heroscape, arcane legions, Dungeons and Dragons, and a host of other pre-paints. HAD. Lots of ongoing problems with pre-paints, mostly due to the production in china of them.

Agreed again, prepainted sucks balls, a sizeable amount of the hobby of wargaming with GW product is about the painting and modelling. Those who walked that line have already demonstrated what a terrible idea it is. Rackham... lest we forget...

mikhaila wrote:
4) Start the R&D required to adapt GW's business model to the future reality of cheap, accessible 3D scanning and printing - in color. It's coming.

Yep, and when I want a badly sculpted paper mache orc that costs way too much money, I'll let you know. The whole 3-D printing thing pops up about once a week.

It's still in it's infancy but the 3d scanning does offer potential for the future, I can certainly see terrain being one of the opportunities, having seen those infinity bridges and terrain being made by microart studios, that sort of thing could be easily done with this tec and that's only going to improve over time.

mikhaila wrote:
This whole list is fairly idiotic to me, as it takes the company in directions it has no reason to go, abandoning more of it's core market, and delving into projects that have bankrupted other companies. Sill, silly, stuff.

I agree on prepainted models, I mostly agree with about the computer games industry (but 'he who dares'...) and I agree about the 3d at the moment but that's going to change.

I disagree on the IT side of things, I think GW needs to pull it's socks up and get into this in a big way.

Backfire wrote:

Kroothawk wrote:

SilverMK2 wrote:I'm pretty sure that on the last financial report they made somewhere in the region of £15m and paid out over £16m in dividends. I'm more than happy to be corrected on this because if it is true, that is just wrong. There is so much investment that GW could make with that money.

It is £ 15.3m operating profit and £ 19.67m dividends, so draining the company of £ 4.37m.

I'm afraid you are incorrect there. There is no such line for "£19.67 million" anywhere in the report. Someone has added up the dividends from LAST year to this years dividend.
As it is, their net funds increased by £0.5 million from 2010 to 2011. So no, it does not seem that company is being "drained from cash".