As if investors in Hipgnosis Songs Fund, the London-listed owner of music rights from artists including Blondie to Neil Young, weren’t already furious, Monday brought fresh fuel for rebellion. The fund will skip dividends until at least its next financial year to preserve cash; that’s on top of the cancellation of the last quarterly distribution.
The infuriating detail is that the blame is being pinned on an increase this year of $23m to $68m (£18.5m to £55m) in so-called “catalogue bonuses” – a form of performance-related payment dictated by past acquisition agreements. Since beating performance hurdles should, if the terms of a deal are crafted well, be good for the acquirer, not just the seller, Hipgnosis’s shareholders may reasonably wonder why the mechanics of these payments wasn’t previously spelled out.
