Over the years, RTC Group (RTC) has grown from a small specialist recruiter into a staffing group serving a range of manufacturing, engineering and technical clients. The company is traded on Aim, but despite being small (valued at about £17.5mn), a vote to appoint new directors at its AGM on 27 May has put the focus firmly on governance issues.
For some years, the group operated without non-executive directors (NEDs). Following the sudden death in 2023 of Bill Douie, its co-founder and chair, the board was reduced to just two: Andy Pendlebury, who had been chief executive since 2007, and Sarah Dye, the finance director since 2013. Pendlebury then began chairing the group as well. Dye also acts as the company secretary, a role that elsewhere involves advising on company law and corporate governance. During 2024, two NEDs came on board, but by the end of 2025 one had resigned for personal reasons and the other, Nick Spoliar, was no longer independent since his employer became RTC’s broker.
The Quoted Companies Alliance (QCA) Code provides guidance on how Aim companies should be governed. It cautions against chief executives chairing their companies, lest they assume “unfettered powers of decision”. To avoid the groupthink that can take root in long-serving boards, at least two independent NEDs are recommended. The RTC directors say they’re close to appointing one.
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Since remuneration committees are supposed to comprise only NEDs, the lack of them at RTC creates a particular problem. Pendlebury is on the committee, but his pay is solely determined by Spoliar, whose firm is the company broker, appointed by the board headed by Pendlebury. Last year, Pendlebury’s salary was £330,000. His discretionary bonus was £324,000. The salary of the other two executives was exactly two-thirds of Pendlebury’s (£220,000). Their bonuses were exactly half of his (£162,000).
These suspiciously round amounts suggest that they’re not related to personal performance. Spoliar says that pay recognises “comparable jobs in the sector”, but how were the bonuses arrived at? The annual report doesn’t say. Perhaps the record profits were a factor – except that including national insurance, total executive director pay cost the company £1.7mn. That almost equates to the year’s profit after tax (£1.8mn) and to the cost of the buyback (£0.85mn) and dividend (£0.84mn) paid to shareholders.
A shareholder group, which owns 24 per cent of the company, says that RTC pay equates to 1.8 per cent of revenue while that of a peer group of recruitment company competitors – SThree (STEM), Staffline (STAF), Robert Walters (RWA), Empresaria (EMR), Hays (HAS), Gattaca (GATC) and Hercules Site Services (HERC) – is 0.3 per cent. And why was all the bonus paid upfront and in cash? These days, companies normally hold some pay back. A good proportion is paid in shares, often conditional on future performance. That would help RTC executives, who other than Pendlebury own little of their own company, to share the same vested interest as shareholders.
Cliff Weight, a former recruitment consultant and RTC investor, believes the board has in effect forced the activists’ hand, resulting in a resolution to appoint two new independent NEDs: Paul Hooper and Gerard Oates. The RTC directors say these do not have “the requisite experience, independence or sector knowledge”. In fact, both have experience. Hooper recently retired after successfully building up Alumasc (ALU), where he had been a highly regarded chief executive for 23 years. Oates is an experienced NED and a board adviser. Both could bring structure and focus and help to articulate a strategy with milestones against which performance-related pay would be assessed. That would probably strengthen management’s zest to achieve. The objective, fresh thinking of truly independent NEDs could highlight unspoken assumptions, cut through complacency and help to spot risks.
Since the resolution was tabled, the share price has risen by a quarter. Weight interprets this as evidence that other investors see the potential in RTC being a niche provider of “labour for rail, energy and smart-metering sectors within the UK’s £700bn infrastructure plan” and that a more professional board could significantly increase margins – and the share price.
At the AGM on 27 May, shareholders face a choice. Do they wish RTC to carry on under the current board and accept the modest growth, risks and high pay that the current trajectory involves? Or do they want to bring in new independent directors and fresh thinking while addressing some of the governance issues that have been highlighted by concerned investors?
