Interactive Investor

AGM alert: Smith & Nephew, BAE Systems, GSK, Barclays

If UK firms want to keep the best talent, they’ll have to pay them more. That’s the argument management must sell to shareholders. Graeme Evans highlights potential flashpoints at a handful of FTSE 100 companies.

19th April 2024 08:35

by Graeme Evans from interactive investor

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American-style pay deals for senior bosses at Smith & Nephew (LSE:SN.) are set to keep the AGM focus on how heavyweight FTSE 100 firms attract and retain top talent in the global market.

AstraZeneca (LSE:AZN) shareholders last week backed a more lucrative remuneration package for CEO Pascal Soriot, while next Thursday’s AGM of London Stock Exchange will see the company address the compression of boss David Schwimmer’s pay with his senior hires.

Smith & Nephew is another firm concerned that its remuneration policies have the potential to hinder its performance. The medical devices firm was founded in Hull in 1856 but the UK now accounts for around 3% of revenues and just 7% of its 18,000-strong workforce.

Over 50% of its revenues arise in the US and nearly all of its senior operational managers, including its CEO Deepak Nath, are US citizens and based in the country. That’s why it has proposed a new remuneration structure more in line with those of its MedTech rivals.

New chair Rupert Soames wrote in the annual report: “Currently our remuneration policies for executive directors are aligned to the norms of people living and working in the UK.

“Given the small proportion of our revenues that arise in the UK, and the fact that the centre of gravity of the MedTech industry is in the US, this is not sustainable if we are to attract and retain people who live and work in the US.”

As the AGM season continues, other heavyweight firms about to put their pay deals before shareholders include BAE Systems (LSE:BA.), GSK (LSE:GSK), Barclays (LSE:BARC) and Reckitt Benckiser Group (LSE:RKT).

Smith & Nephew

When: 12pm, Wednesday 1 May.

Where: Smith+Nephew Academy London, Building 5, Croxley Park, Hatters Lane, Watford, WD18 8YE.

How to participate: Proxy voting instructions should be returned no later than 12pm, Monday 29 April. More AGM details can be found here.

Who’s in the chair? Former Serco and Aggreko chief executive Rupert Soames is hosting his first Smith & Nephew AGM, having joined the board in April 2023.

How did the company do in 2023? The orthopaedics, sports medicine and advanced wound management firm achieved revenues of $5.55 billion (£4.4 billion), up 7.2% on an underlying basis and ahead of earlier guidance between 5% and 6%. Operating profit of $425 million was $25 million lower, based on a margin of 7.7%. A final dividend of 23.1 US cents a share is due to be paid on 22 May, giving an unchanged total for the year of 37.5 US cents.

How have shares performed? Down 2% in 2023 to 1,078.5p (966.8p on Thursday).

How much is the boss paid? Deepak Nath’s base salary rose this month by 3% to $1.57 million. His total remuneration for 2023 amounted to $4.66 million, including cash and shares worth $2 million after the annual bonus scheme paid 61% of the maximum opportunity. Performance was above maximum for revenue and between threshold and target for trading margin. Nath was not a participant in the 2021 long-term incentive scheme, which vested at 21% after three of the four metrics including total shareholder return and cumulative free cash flow were not met. The vesting of buy-out awards granted in respect of shares forfeited at his previous employer contributed $1.08 million to the CEO’s final figure.

Why is the company changing its remuneration policy? S&N generates about 50% of its revenues in the United States, where its CEO and key operational leaders are based. However, the target value of Smith & Nephew’s total compensation package for the role of CEO falls materially below the lower quartile of its global peer group. It points out that most leading MedTech firms use restricted shares, or options, or both, and these plans usually vest on a phased annual basis over three years, rather than vesting on a cliff edge basis at the end of three years as with S&N’s current Performance Share Programme. Annual bonus deferral of any kind and post-vesting holding periods on long-term incentives are also not common.

What’s proposed? Changes include the introduction of a new Restricted Share Programme worth 125% of base salary. These awards for US executive directors will vest in three equal tranches over a three-year period, depending on a reasonable judgement underpin being met. In addition, the maximum opportunity under the existing Performance Share Plan for US executive directors will rise from 275% to 300% of salary. This will be assessed over a three-year period with an additional post-vesting two year holding period. The changes increase the CEO’s maximum opportunity to about $11.8 million, but with this level still around the lower quartile against global MedTech peers. The annual report added: “We understand that some investors would ideally wish to see financial performance meeting investor expectations in advance of increasing long-term incentives, but in the board’s view the changes must be implemented in the short-term to incentivise long- term stability.” Share ownership guidelines for US executive directors will also increase from 300% to 500% of salary.

How did last year’s AGM go? The annual remuneration report got 94.20% support, while 94.55% of shareholder votes were in support of the new three-year remuneration policy.

How’s the company doing on diversity? The recent departure of chief financial officer Anne-Françoise Nesmes has reduced the percentage of female board members from 33% to 27.3%, with no women in senior roles.  Two directors are from ethnic minority backgrounds.

BAE Systems

When: 9.30am, Thursday 9 May.

Where: On the Lumi online platform. In line with a growing number of other large FTSE companies, BAE has changed the format of the AGM in order to focus on a digital experience so that it can deliver a more inclusive meeting for all shareholders.

Who’s in the chair? Cressida Hogg was appointed in May 2023. She is also a board member of London Stock Exchange and is the former chair of Land Securities. Much of her executive career was spent with 3i Group.

How to participate: Proxy voting instructions must be registered by 9.30am, Tuesday 7 May. More AGM details can be found here

How did the company do in 2023? Sales and underlying earnings rose by 9% to £25.3 billion and £2.6 billion respectively. The company, which employs 99,800 people and generates 42% of its revenues in the UK, reported a jump in its order backlog of £10.9 billion to £69.8 billion in the year. Earnings per share (EPS) lifted 14% to 63.2p and the total dividend by 11.1% to 30p, with the full-year award of 18.5p a share due to be paid on 3 June.

How have shares performed? Up 29% to 1,110.5p (1,287p on Thursday).The company points out that £100invested in BAE Systems on 31 December 2013 was worth £381.74 at the end of last year, compared to £167.98 if the same sum had been invested in the FTSE 100.

How much is the boss paid? Charles Woodburn’s salary for this year has increased 4.5% to £1.23 million. His total remuneration for 2023 amounted to £13.45 million, the highest since his appointment in 2017 and above 2022’s £12 million. About 84% of his pay is performance based, with 58% in shares. This includes the £2.6 million annual bonus after outperformance on the financial metrics of underlying EPS, net cash and order intake led to the award of 98.4% of the maximum opportunity. The 97.9% vesting outcome on long-term incentive shares granted in March 2021 when shares were 500p contributed £9.45 million to the overall figure. For the three-year performance period, total shareholder return grew by 144.8% with average annual EPS growth of 13.3% per year and free cash flow of £6.2 billion.

How did last year’s AGM go? The annual remuneration report got 97.82% support, with 97.61% of shareholder votes in favour of the new three-year remuneration policy.

How’s the company doing on diversity? At the time of the annual report, women held 38% of board positions including the roles of chair and senior independent director. One member of the board is from a minority ethnic background.


When: 2.30pm, Wednesday 8 May.

Where: Royal Lancaster London, Lancaster Terrace, London W2 2TY.

How to participate: Shareholders who attend via the Lumi AGM website will be able to ask questions of the board, orally or in writing, and submit votes. The deadline for voting in advance of the meeting is 2.30pm, Friday 3 May. More AGM details can be found here.

Who’s in the chair? Jonathan Symonds was appointed to the role in September 2019. The former chief financial officer of Novartis previously led the board of HSBC.

How did the company do in 2023? Turnover of £30.3 billion was 3% higher at actual exchange rates, driven by 25% growth in vaccine sales. Drug pipeline progress saw four major product approvals, including the world's first respiratory syncytial virus vaccine, Arexvy. Adjusted operating profit lifted 8% to £8.8 billion and earnings by 11% to 155.1p, or 12% and 16% respectively at constant exchange rates. The fourth quarter dividend of 16p a share was paid on 11 April and brought the total to 58p compared with 61.25p the year before.

How have shares performed? Up 2% at 1,450.2p (1,583.5p on Thursday).

How much is the boss paid? Emma Walmsley, who has run GSK since 2017, has received a 4% increase in base salary for 2024 to £1.36 million. Her total remuneration for 2023 amounted to £12.7 million, up from £8.4 million the year before and the highest of the past decade. She got cash and deferred shares worth £3.8 million after the annual bonus scheme paid 96% of the maximum opportunity, reflecting a sales and profits performance significantly higher than both the guidance the company provided at the start of the year and market expectations. The 69% vesting of performance shares granted in 2021 contributed £7.3 million to the final figure. This was after targets were met in three out of four measures, with the exception being total shareholder return. GSK ranked ninth out of ten companies, a performance not helped by the adverse share price reaction to Zantac litigation and investor concerns over the relative strength of the company’s pipeline. 

How did last year’s AGM go? The annual remuneration report was approved with 88.84% of votes cast in favour of the resolution.

How’s the company doing on diversity? Female board representation is 42% and includes one of the very few all-female executive boards running a FTSE 100 company. At least one member of the board is from an ethnically diverse background.


When: 11am, Thursday 9 May.

Where: SEC Armadillo, Exhibition Way, Glasgow G3 8YW. This is the first time the AGM has been held in Scotland, where the company has a campus in Glasgow employing over 6,000 staff.  

How to participate: This will be a hybrid event, with shareholders able to attend electronically using an online platform. The deadline for proxy voting forms is 11am, Tuesday, 7 May. More AGM details can be found here.

Who’s in the chair? Nigel Higgins has been in the role since May 2019. He spent 36 years at Rothschild, where he was most recently deputy chairman.

How did the company do in 2023? Income of £25.4 billion rose 2%, led by an 18% increase in consumer cards and payments. Operating expenses of £16 billion were 2% higher, while credit impairment charges of £1.9 billion compared with £1.2 billion the year before. Pre-tax profits fell to £6.6 billion from £7 billion, reflecting £900 million of structural cost actions taken in the fourth quarter. Excluding these, earnings per share rose to 32.4p from 30.8p. Shareholder distributions of £3 billion rose 37% on 2022’s level, including through the payment of a final dividend of 5.3p a share on 3 April. The total dividend lifted to 8p from 7.25p in 2022.

How have shares performed? Down 3% at 153.8p (184p on Thursday).

How much is the boss paid? The fixed pay of C. S. Venkatakrishnan, who was appointed in November 2021, has increased by 2.5% to £2.95 million. Half of this is in shares paid quarterly and subject to a holding period of five years, with 20% released annually. The bank’s remuneration committee points out that his maximum total compensation opportunity of £10 million is significantly behind international banking peers. His total remuneration for 2023 amounted to £4.6 million, including cash and shares worth £1.4 million after the annual bonus scheme paid 53.3% of the maximum opportunity. There was no vesting of long-term incentives as he was not a participant of the scheme in 2021.

What about the bonus pool? The figure of £1.75 billion is down 3% from 2022, which itself included a £500 million reduction for risk and control issues that came to light during the year. The adjustment for 2023 was £185 million.

What’s the response to the removal of the 2:1 'bonus cap'? No new directors’ remuneration policy is proposed for 2024. An AGM resolution has been tabled that would allow the company to adopt a maximum ratio or ratios of variable to fixed remuneration for material risk takers as it considers.

How did last year’s AGM go? The vote on the annual remuneration report got 87.76% support, while the new remuneration policy received 96.69%.

How’s the company doing on diversity? The proportion of women on the board was 38%, short of the 40% recommended target but including one senior position. Three directors were from an ethnic minority background.

Reckitt Benckiser

When: 2pm, Thursday 2 May.

Where: London Heathrow Marriott Hotel, Bath Road, Hayes, UB3 5AN.

How to participate: Proxy voting instructions should be returned no later than 2pm, Tuesday 30 April. More AGM details can be found here.

Who’s in the chair? Chris Sinclair is stepping down after the AGM, having been a non-executive director since 2015 and in his present role since May 2018. Senior independent director Jeremy Darroch, who is the former Sky chief executive, will succeed him.

How did the company do in 2023? Revenues of £14.6 billion rose 3.5% on a like-for-like basis, reflecting price and mix improvements of 7.8% and a volume decline of 4.3%. Hygiene and Health brands delivered growth of 5.1% and 5% respectively, with Nutrition down 4%. Adjusted operating profit of £3.37 billion was down slightly due to brand investment and inflation-led cost base increases. Earnings per share of 323.4p was 5.4% below 2022 and the total dividend rose 5% to 192.5p, including the 115.9p a share due to be paid on 24 May.

How have shares performed? Down 6% at 5,420p (4,139p on Thursday).

How much is the boss paid? Kris Licht, who was made an executive director in June and chief executive in October, receives an unchanged salary of £1.1 million for this year. His total remuneration in 2023 amounted to £3.6 million, including cash and deferred shares worth £1.8 million based on 82% of the annual bonus opportunity. Reckitt said the outcome reflected the company’s progress in complex external market conditions, with 3.5% net revenues growth stronger than expected at the start of 2023. It also noted margin expansion, strong free cash flow and increased returns to shareholders. Long-term incentives granted in Licht’s previous role in 2021 contributed £1.08 million to the final figure. This was based on 78% vesting after the company achieved the near maximum result for net revenues and the metrics for earnings per share and return on capital employed came in between threshold and the maximum.

What about the former boss? Nicandro Durante, who stepped in as interim CEO in September 2022 and remained on the board until the end of 2023, got £5.26 million last year. This included his £1.1 million salary and an annual bonus of £3.8 million.

How did last year’s AGM go? The annual remuneration report got 92.80% support.

How’s the company doing on diversity? The percentage of women in board roles at the end of 2023 was 40%, with one now in a senior position after the appointment of Shannon Eisenhardt as chief financial officer. At least one director is from an ethnic minority background.

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