Avis Shareholder Discount Cut - Angry Scenes At AGM

NonGeographicalMan

Below is an email I have just sent to Alun Cathcart, Chairman of Avis, following my attendance at last Tuesday's (May 19th 2009) AGM of Avis Europe in Bracknell.

Their decision to slash the shareholder discount from 50% to a worthless 20% level on already worthless shares is in my view the final insult. To make matters worse they presented everything at the AGM as though matters at the company were all totally hunky dory and of course their CEO still pays himself £500,000 per annum (not cut by a penny) while their shareholders are kicked in the teeth.:eek::mad:

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Original Message

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Subject: Avis Europe AGM - Slashing of Shareholder Discount & Zero% Shetland (Sumburgh) Discount
Date: Sun, 24 May 2009 16:20:37 +0100
To: :: Email addresses removed for privacy reasons ::

Dear Mr Cathcart,

Avis-Europe AGM - Management Fails to Offer Longstanding Shareholders Any Justification For Punishing Their Continued Loyalty

I write further to my attendance at your AGM on Tuesday 19th May 2009 in Bracknell and the very widespread unhappiness expressed by myself and several other loyal shareholders present at the meeting about Avis's decision to slash its shareholder discount from a worthwhile 50% off your full rental rates to a generally meaningless 20% discount where there is nearly always another rival company to Avis at any rental location offering a lower rental price than Avis's now parsimonious shareholder discount price.

The view expressed by myself and also supported by several other shareholders present at the Avis Europe AGM was that this was pretty much the last straw in a situation where longstanding poor management of Avis Europe has led to a disastrous slump in its share price of well over 90% from its market high point. Both I and other shareholders also felt that the explanation you offered that we the shareholders should also suffer even more of the pain of Avis's poor performance by having our shareholder discount slashed to a level where it is now almost totally worthless was quite unacceptable when you and other executive and other non executive directors have seen no reduction at all in the salaries you are paid by the company (a salary of over £500,000 per annum in the case of Monsieur Bazin).

Whilst you claimed in response to my question that Avis Europe's slashing of shareholder discount from 50% to 20% had not caused a large decline in rentals by its shareholders I note that you offered precisely no audited factual information to back up this claim. This gave me every possible reason to believe that the claim could not in fact be supported by such audited empirical evidence but instead amounted to a form of PR spin. There was also disquiet expressed by another older Avis shareholder that the company had gone back on its previous position that there was no upper age limit at which Avis would rent cars to shareholders as long as they still held a valid driving license and that in many of your locations customers now cannot rent cars at all once they reach 80 and are also experiencing difficulty in doing so once they are aged 70. Again this change combined with the reduction of the shareholder discount to a level at which it is no longer worth having (since some of Avis's own special discount rates are now lower than the shareholder discount rate which is only discounted off the full non discounted business rental price) mean that many shareholders now have very little reason indeed to feel at all positive about the company or their investment in it.

In my own case the last straw has been my attempt today to make a reservation at Sumburgh airport in the Shetland Islands from 18th to 25th June where I find that the quoted prices for a 7 day rental are precisely the same whether or not I use my Avis Preferred Customer Number and surname and/or the shareholder 20% discount code of K222201. This has been confirmed by speaking to your telephone reservation centre today who confirm that they also cannot obtain any discount off the prices quoted at Sumburgh with the shareholder discount code. Whilst it may be that the Sumburgh rental operation is a franchise I cannot see why or how this excuses its not providing a discount since the full 20% shareholder discount is still available at Avis franchise operations in the Greek Islands such as Skiathos.

My own view is that given the strong current of shareholder discontent regarding the reduction in shareholder discount to only 20% expressed at the Avis Europe AGM on May 19th that you should now review the level of reduction of shareholder discount and consider restoring it back to at least a 35% discount and also be looking to lower the very high levels of uninsured excess to which shareholder renters are exposed. These levels of excess are usually particularly uncompetitive (being in the range of 500 to 1000 Euros, even on a Group A vehicle, depending on the rental location) with many of your local rental company rivals at holiday destinations in the Mediterranean, who usually have a far lower uninsured excess or no excess.

I look forward to your comments on all of the above points and especially on the issue of why there is no shareholder discount being given on shareholder rentals at Sumburgh.

Yours sincerely,

Happychappy

Unfortunately I still hold 5000 shares I should have got rid of, and just watched them freefall, yet the remuneration package for the board, climbs with consumate ease...so I suppose the difference between an MP and a board memeber of Avis is......answers on a postcard.

NonGeographicalMan

Happychappy wrote: »

Unfortunately I still hold 5000 shares I should have got rid of, and just watched them freefall, yet the remuneration package for the board, climbs with consumate ease...so I suppose the difference between an MP and a board memeber of Avis is......answers on a postcard.

Only 500 shares here in my case as I simply bought the minimum to get the then worthwhile shareholder discount. I did think of buying more but on considering prospects in the car rental sector and Avis's behemoth type nature fortunately considered it unwise. I probably got a few car rentals from them at about £200 in total under what I would have had to pay the next cheapest rental car competitor (shareholder rates in Corsica and small Greek Islands were particularly competitive) but as I have lost over £300 on the shares I am still in a minus situation.

The AGM was incredibly irritating as they used the latest expensive looking Plasma screens and all their executives wore the sharpest and most expensive looking suits with the most expensive looking hairdos but they told us that the shareholder discount has been cut as we the shareholders have to share "some of the pain" of the downturn in the rental sector. It does not seem to occur to them that we have already suffered massive pain with our 90% reduction in share price. The decent shareholder discount was the only thing stopping me and most other shareholders from getting rid of our shares.:mad:

They clearly thought their shareholders were all morons who would still book with them even if they increased the price of renting with Avis by 60%. But at 60% more rental cost there are cheaper rivals who do not have Avis's large 600+ Euro excesses, even on a Group A car.

Blah99

Buying into companies for the shareholder discount is a bad investment decision.

NonGeographicalMan

Blah99 wrote: »

Buying into companies for the shareholder discount is a bad investment decision.

That sounds a rather smug and unhelpful point to make.:mad:

sheslookinhot

NonGeographicalMan wrote: »

That sounds a rather smug and unhelpful point to make.:mad:

On the contrary, it appears to be useful advice.

NonGeographicalMan

sheslookinhot wrote: »

On the contrary, it appears to be useful advice.

And what basis do you have making this assertion?:rolleyes:

NonGeographicalMan

This is a bit late in the day but if anyone here is free tomorrow (Wednesday) and is an Avis shareholder who is also unhappy about the slashing of our rental discount from a useful 50% off full list prices to a near useless 20% off list prices (because there are numerous other discount codes that anyone can use that provide discounts up to this level) then they might want to go along to the Avis Europe AGM being held at 2pm tomorrow, Wednesday 26th May at Avis House, Park Road, Bracknell, Berkshire, RG12 2EW

Anyone thinking of going along might want to ask how the directors how they think it helps the company's financial position to have slashed shareholder discounts to a level where nearly all Avis's main rivals amongst the local rental companies are cheaper, even though they do not charge for a second driver or charge Avis's ripoff 600 Euro minimum excess. Also with rental prices in Spain and much of Europe now having reached an extortionate £250 a week for a Group A car in August surely there is far more scope for the original larger shareholder discounts than there was before?

Anyone going along might also want to ask Avis's executive directors paid up to £500,000 per annum how they could justify taking an expensive corporate hospitality tent on the banks of the River Thames at Henley last year for the whole five days of the event. It seems very odd that a company making almost no profit and paying no dividend can still afford to splash out money in such an apparently wasteful way not directly related to any car rental activity.:eek::mad: