Interactive Investor

AGM alert: BT, National Grid, Severn Trent, British Land

These companies have grabbed their fair share of headlines in recent months, including billionaire shareholders and massive fundraisings. Graeme Evans looks at what could happen at their shareholder meetings.

21st June 2024 08:48

by Graeme Evans from interactive investor

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BT Group (LSE:BT.A) shareholders will hear more about Allison Kirkby’s plans for reviving the value of their investments when she attends her first AGM as chief executive.

The business has one of the largest ownership bases of any FTSE 100 company, with more than 600,000 individual shareholders the legacy of its Buzby-branded privatisation in 1984.

This means its annual meeting is typically among the best attended of the AGM season, although shareholders have been encouraged to do so remotely.

The AGM follows another year of share price underperformance, but with spending on the full-fibre broadband rollout now past its peak Kirkby believes BT has a “clear, positive path” for driving significant value.

BT Group

When: 2pm, Thursday 11 July.

Where: Hilton Manchester Deansgate, 303 Deansgate, Manchester, M3 4LQ.

How to participate: The company, which has around 614,000 individual investors, is hosting a combined online and physical meeting as part of efforts to include shareholders “wherever they’re located and whatever their ability”. It adds: “We’ll prioritise making the online experience engaging, accessible and inclusive and we strongly encourage shareholders to join the meeting that way.” Voting instructions should be returned no later than 2pm, Tuesday 9 July. More AGM details can be found here

Who’s in the chair? Former ITV and Royal Mail boss Adam Crozier, who was appointed in December 2021. He also leads the board of Whitbread.

How did the company do in the year to 31 March? Adjusted revenues of £20.8 billion rose 2% on a pro forma basis, partly due to price increases and fibre-enabled product sales in Openreach. 

Underlying earnings of £8.1 billion were 1% higher on the same basis but reported profit before tax of £1.2 billion fell 31% on the year before. Annualised cost savings worth £3 billion were achieved a year ahead of schedule, while capital expenditure on the full fibre broadband rollout has passed its peak. Enhanced cash flow underpins a 3.9% increase in total dividend to 8p a share, including plans for the £553 million payment of 5.69p a share on 11 September.

Who’s the new boss? Allison Kirkby, a non-executive director since 2019, became chief executive in February. The former Telia boss has taken over from Philip Jansen, who during five years as chief executive took BT more than halfway to its target of delivering full fibre connections to more than 25 million premises across the UK by December 2026.

How have shares performed? Down 25% to 109.65p in the year to 31 March (143.2p on Thursday). Kirkby said in the annual report: “I know BT Group’s share price has underperformed in recent years, but we now have a clear, positive path that aims to drive significant value for all stakeholders going forward.”

How much is the new boss paid? Kirkby’s recruitment package includes an annual salary of £1.1 million and on-target bonus opportunity of 120% of salary, with 50% of any bonus deferred into shares for a three-year period. She also gets a Restricted Share Plan (RSP) grant worth 200% of salary, pro-rated to reflect that she joined part-way through the vesting period.

What about her predecessor? Philip Jansen stepped down as chief executive on 31 January but is an employee until 30 June. His total remuneration for 2023/24 amounted to £3.7 million, which includes an annual bonus of £1.45 million based on 65.9% of the maximum opportunity.   Given his retirement, no deferral will apply and the full bonus will be paid this month. The vesting of Restricted Share Plan awards contributed £1.1 million to the final figure. He will be required to keep a minimum shareholding equivalent to 500% of his annual salary for two years.

How was discretion used? The annual bonus is based on five measures, weighted 35% each on adjusted earnings and normalised free cash flow and a further 20% on net promoter score. This resulted in a formulaic outcome of 129.2% of target, equivalent to 77.3% of the maximum opportunity. Having considered other factors including the share price performance, the remuneration committee reduced the final bonus scorecard outcome for Jansen and finance boss Simon Lowth to 110% of target and 65.9% of the maximum opportunity.

How did last year’s AGM go? The new three-year remuneration policy was backed with 98.17% support, while the annual remuneration report got 98.15%.

How’s the company doing on diversity? The gender split of the ten-strong board following the AGM will be 40% female, including two in senior roles. Three directors are from an ethnic minority background.

National Grid

When: 11am, Wednesday 10 July.

Where: The Slate, The University of Warwick, Scarman Road, Coventry, CV4 7SH.

How to participate: An electronic meeting platform will enable National Grid (LSE:NG.) shareholders to watch and hear the proceedings, ask questions and vote on the business of the AGM in real time. The deadline for proxy voting instructions is 11am, Monday 8 July. More AGM details can be found here.

Who’s in the chair? Paula Rosput Reynolds, who has over 20 years’ experience as a board director in the UK and US, has held the role since May 2021.

How did the company do in the year to 31 March? Operating profit of £4.8 billion and earnings per share of 73.6p were both 6% higher on an underlying same currency basis. Capital investment rose 8% to a record £8.2 billion. A final dividend of 39.12p is due to be paid on 19 July, increasing the full year dividend in line with policy by 5.55% to 58.52p a share. Alongside the results, National Grid announced a £7 billion rights issue offering existing shareholders seven new shares for every 24 held. This fundraising completed in June and is part of plans to support £60 billion of investment over the next five years as the company looks to deliver a step-change in critical energy infrastructure in the UK and US.

How have shares performed? Down 3% to 1,066p in the year to 31 March (901.4p on Thursday).

How much is the boss paid? The salary of John Pettigrew, who has been in charge since 2016, is up 4.5% to £1.19 million for the current financial year. His total remuneration for 2023/24 amounted to £6.5 million, down from the previous year’s decade high of £7.3 million after long-term incentives vested at 81.9% compared with the maximum result the year before. The £3.9 million contribution from this year’s long-term incentives was boosted by a total shareholder return of 45.5% over the three-year performance period, equivalent to £926,000. Pettigrew’s annual bonus of £1.1 million was based on 75.5% of the maximum opportunity. 

How was variable pay determined? Financial performance accounts for 70% of the annual bonus, with the maximum result achieved for underlying earnings. Following the death of a power distribution worker in August, the remuneration committee used discretion to reduce the award under the operational part of the scheme. The vesting of long-term incentives granted in 2021 was based partly on return on equity over the three-year performance period.

How did last year’s AGM go? The annual remuneration report was approved with 93.62% of votes in favour.

Is there a climate-related vote? An updated version of the company’s Climate Transition Plan sets out its greenhouse gas emissions reduction targets and pathway to being a net zero business by 2050. The non-binding advisory vote will give shareholders the opportunity to engage with the company on the progress of its climate strategy.

How’s the company doing on diversity? Four board directors are female, slightly below the recommended 40% representation. Two directors are from a minority ethnic background.

Severn Trent

When: 10am, Thursday 11 July.

Where: Severn Trent Academy, Hawksley Park, St. Martins Road, Finham, Coventry, CV3 6PR.

How to participate: The proxy voting deadline is 10am, Tuesday 9 July. There will not be an option this year for Severn Trent (LSE:SVT) shareholders to follow the meeting virtually. More AGM details can be found here.

Who’s in the chair? Christine Hodgson, who is the former executive chair of Capgemini UK, was appointed in April 2020.

How did the company do in the year to 31 March? Revenues of £2.34 billion rose 8%, driven by its regulated water and wastewater business. Pre-tax profits of £201.3 million were 19.9% higher, due mainly to the impact of lower inflation on finance costs. A final dividend of 70.10p is due to be paid on 17 July, in line with the company’s inflation-linked payout policy. This gives a total for the year of 116.84p, up from 106.82p the year before.

What about operational performance? The company recorded zero serious pollution incidents, but unprecedented weather drove an increase in Category 3 pollution incidents to 239 from 193 in 2022. The sustained rainfall and flash floods also meant more external sewer floodings while spills from storm overflows averaged 24.9 against 18.4 in 2022 and 24.7 in 2021. The company reported its lowest ever annual levels of water leakage.

How have shares performed? Down 14% to 2,470p in the year to 31 March (2,426p on Thursday). In September, the company placed new shares at 2,150p in order to raise £1 billion towards the significant step-up in investment planned for the next regulatory period.

How much is the boss paid? The salary of Liv Garfield, who has been chief executive since 2014, is due to increase next month by 5% to £839,600. Her total remuneration for 2023/24 amounted to £3.18 million, up 2.1% on the previous year. This included an annual bonus of £584,000 in cash and shares based on 60.9% of the maximum opportunity. Long-term incentives contributed a total of £1.66 million, including £308,000 through the first vesting of a sustainability element introduced in 2021. This measured the company’s performance against four environmental commitments as it looks to achieve net zero operational emissions by 2030.

How was the annual bonus determined? The award is based 40% on pre-tax profit, as well as 35% for customer and environmental performance. A further 12% relates to river health, which in 2023/24 saw nil outcome for the reduction in sewer overflows but maximum performance on RNAGS (Reasons for Not Achieving Good Ecological Status). 

Why was discretion used? The bonus outturn was reduced from 65.9% in order to reflect February’s £2 million fine for Severn Trent Water in relation to a pollution event which occurred at its wastewater treatment works in Barlaston during 2020. The remuneration committee made the adjustment despite the company being “highly confident” that it will receive an Environmental Performance Assessment 4-star rating for a fifth consecutive year.

What’s in the new remuneration policy? Proposed changes include a stronger focus on environmental performance in the annual bonus, with the river health element increasing to 15% of the total and the Environmental Performance Assessment going from 5% to 10%. The long-term incentive scheme is also being updated to increase the focus on broader stakeholder priorities. The three-year policy is otherwise largely the same as the one approved at the 2021 AGM with 99.66% of votes in favour.

How did last year’s AGM go? The annual remuneration report was approved with 95.40% support.

Is there a climate-related vote? The board’s long-term approach to climate change was last subject to a non-binding advisory vote at the 2021 AGM, receiving 99% support. A vote is scheduled to take place every three years but with no material changes to the company’s climate plan the 2024 vote has been deferred to the 2025 AGM.

How’s the company doing on diversity? Six of the eight board members are women, including the chair, chief executive and chief financial officer. Two members of the board are from minority ethnic backgrounds.

British Land

When: 11.30am, Tuesday 9 July.

Where: 100 Liverpool Street, London EC2M 2RH.

How to participate: Following increased attendance last year, British Land Co (LSE:BLND) will again be holding the meeting later in the morning and only offer in person attendance. Proxy voting instructions should be returned by 11.30am, Friday 5 July. More AGM details can be found here.

Who’s in the chair? Former Arm Holdings finance director Tim Score is stepping down after the AGM, having been appointed to the board in 2014 and as chair in 2019. His successor is William Rucker, who is the current chair of Intermediate Capital and has previously led the boards of Crest Nicholson, Quintain Estates and Development and Marston’s.

How did the company do in the year to 31 March? Estimated rental value growth accelerated to 5.9%, exceeding the company’s guidance in its key sectors of campuses, retail parks and London urban logistics. It also outperformed the MSCI All Property total return benchmark by 300 basis points. Underlying profit of £268 million was 2% higher and earnings per share up 1% to 28.5p. The total dividend of 22.80p is 1% higher and includes plans to pay 10.64p on 26 July.

How have shares performed? Up 2% to 395.2p in the year to 31 March (415.6p on Thursday).

How much is the boss paid? Simon Carter’s base pay of £773,000 was not changed in April after a benchmarking exercise concluded that directors’ salaries remain appropriate. His total remuneration for 2023/24 amounted to £2.5 million, representing a rise from £1.6 million the year before and the most received by the company’s chief executive since Chris Grigg got £3.6 million in 2015/16. The figure included cash and deferred shares worth £919,000 after the annual bonus scheme paid 79.33% of the maximum opportunity. This outcome was driven by the maximum result for total property return versus the wider sector and underlying profitability. The 40% vesting of long-term incentives contributed £671,000 compared with £108,000 the year before. 

How did last year’s AGM go? The annual remuneration report was approved with 92.51% votes in favour.

How’s the company doing on diversity? The 12-strong board’s gender split is 50-50 but without any women occupying the four senior roles. Two directors are from ethnic minority backgrounds.

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