Can these three big firms avoid major pay row?

Pay awards at each of these companies, including two in the FTSE 100, have courted controversy in recent years. Our City writer reveals what to expect when this year's pay plans are put to shareholders. 

Executive pay controversies that have been behind three years of AGM protest votes at Whitbread (LSE:WTB) and Informa (LSE:INF) will be revisited by shareholders this month.

Last year, only 29% of votes backed the Informa remuneration report, as shareholders once again rebelled over the introduction of a pay framework that sought to focus on the company’s cash and liquidity priorities during the pandemic recovery.

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Premier Inn owner Whitbread has also been under fire at recent AGMs, most recently due to the scale of the bonuses it paid at a time of government furlough support.

Whitbread

When: 2pm, Thursday 22 June.

Where: Whitbread Court, Houghton Hall Business Park, Porz Avenue, Dunstable, LU5 5XE.

How to participate: The AGM will be held as a combined physical and electronic meeting via a live webinar. This means shareholders can still exercise their votes and raise questions during the meeting as if they were attending in person. Proxy voting instructions should be returned no later than 2pm, Tuesday 20 June. More AGM details can be found here.

Who’s in the chair? Former ITV and Royal Mail chief executive Adam Crozier was appointed in March 2018.

How did the company do in the year to 2 March? Revenues at the Premier Inn owner rose 27% against the pre-pandemic period in 2020 to £2.6 billion, with adjusted operating profit up 12% to £544 million. Earnings per share of 138.4p compared with 125.3p in 2020. A final dividend of 49.8p a share worth £100 million is due to be paid on 7 July and represents an increase of 43% on 2022’s level, meaning the total for the year is 114% higher at 74.2p.

How have shares performed? Up 8% to 3,075p (3,311p on Thursday).

How much is the boss paid? Former Domino’s Pizza UK boss Dominic Paul has been recruited on a salary of £900,000, which compares to £921,450 in Alison Brittain’s final year as chief executive. Her total remuneration for 2022/23 amounted to £3.2 million, which included cash and deferred shares worth £1.48 million after the annual bonus scheme paid 94.4% of the maximum opportunity. Long-term incentives contributed £605,000 to the final figure after the vesting outcome of 50% was further reduced to 45% as Whitbread evened out windfall gains caused by a materially lower share price when the grant was made in 2020. The new chief executive, who took on the role in mid-January, has been handed shares with a face value of £2.12 million to compensate for the awards forfeited at his previous employer.

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How did last year’s AGM go? The annual remuneration report was opposed by 38.4% of votes cast, reflecting concerns that a 25% reduction to the incentive outcome to reflect the quarter of the year when the company received government furlough support did not go far enough. The new remuneration policy got 85.7% support.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? Three members of the board identify as Black, Asian or Mixed Ethnicity. The board is 33% female, with the company committed to achieving its 40% target in the near future. 

Saga

When: 11am, Tuesday 20 June.

Where: Numis Securities, 45 Gresham Street, London EC2V 7BF.

How to participate: An ‘in person meeting’ is being held by Saga (LSE:SAGA) as there was limited uptake when the company provided online access last year. The deadline for the receipt of online or postal voting forms is 11am, Friday 16 June. More AGM details can be found here.

Who’s in the chair? Roger De Haan, the son of Saga’s founder Sidney, returned to the business as non-executive chairman in 2020.

How did the company do in the year to 31 January? Revenues of £581.1 million were 54% higher due to the continued recovery of cruise and travel operations after the pandemic. An underlying profit of £21.5 million was within the guided range of £20 million to £30 million. The overall loss before tax of £254.2 million was caused by the £269 million impairment of goodwill in the insurance division. Net debt fell 2% to £711.7 million and the leverage ratio to 7.5 times from 11.7 times the year before.

How have shares performed? Down 36% to 186.3p (114p on Thursday).

How much is the boss paid? Euan Sutherland’s base salary increased in February by 3% to £750,110. His single figure of remuneration for 2022/23 amounted to £1.75 million, including cash and shares worth £385,587 based on 35.3% of the maximum bonus opportunity. The total also includes £582,610 of deferred shares under the restricted share plan.

How did last year’s AGM go? The annual remuneration report and the binding vote on the remuneration policy were approved with just under 80% of votes in favour. Opposition to the new three-year policy followed the introduction of the Saga Transformation Plan (STP), which has a qualifying hurdle of 600p including dividends over its five years. If the hurdle is achieved, participants get 12.5% of this excess value up to a limit of 10% of share capital. Saga said 18% of the pool will go to the chief executive, with a cap of £15 million. In this year’s annual report, Saga said the plan was fully aligned to the delivery of Saga’s “sizeable” transformation strategy. On the remuneration report, the committee said it acknowledged the disappointing shareholder experience before highlighting the vital need to retain and motivate key executives in order to deliver the planned multi-year transformation.

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What’s the view of voting agencies? Glass Lewis believes shareholders could reasonably have expected a more proactive response to the AGM dissent. It also remains concerned about the potential for excessive remuneration under the STP, particularly given that it will operate alongside the restricted share plan. However, the agency notes that no awards were due to vest during the year under review and that, based on current performance, awards would only vest following a significant improvement in share price. It added: “As such, we do not believe that this issue warrants shareholder action at this time. We will, however, continue to monitor this issue going forward.”

How’s the company doing on diversity? The board gender split is 30% female. One member of the board is from a minority ethnic background.

Informa

When: 11am, Thursday 15 June.

Where: 240 Blackfriars Road, London SE1 8BG.

How to participate: Proxy voting forms need to be returned no later than 11am, Tuesday 13 June. More AGM details can be found here.

Who’s in the chair? John Rishton, the former Rolls-Royce chief executive, joined the board in 2016 and was appointed chair in June 2021.

How did the company do in 2022? Revenues of £2.3 billion from continuing operations rose 42.9%, reflecting an improved performance in academic markets, strong growth in live and on-demand business-to–business events and continued growth in digital services. Adjusted earnings rose 89% to 24.4p a share, aided by the impact of share buybacks. A final dividend of 6.8p a share is due to be paid on 14 July, bringing the total for the year to 9.8p.

How have shares performed? Up 18% to 619.6p (697.8p on Thursday).

How much is the boss paid? Stephen Carter’s 2022 basic salary of £875,800 has increased 4% this year. His total remuneration for last year amounted to £3.8 million, including cash and shares worth £785,593 after the bonus scheme paid 89.7% of the maximum. Long-term incentives granted in 2020 contributed £1.9 million or 50% of the award as the company met cash flow targets but not total shareholder return against its FTSE 51-150 peer group. 

How did last year’s AGM go? Strong opposition to the annual remuneration report for the third year in a row, with only 29% of votes in favour in 2022, followed changes made to the pay framework in order to focus on cash and liquidity priorities during the pandemic. These included the introduction of an equity revitalisation plan composed solely of restricted share units, where the Informa share price needs to exceed 545.4p on vesting. Shareholders’ concerns included the decision to grant the 2021, 2022 and 2023 awards at the same time in January 2021, when the share price was still significantly below pre-pandemic levels. Annual cash flow targets were also used for benchmarking performance on long-term incentives.

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How has the company responded to the dissent? A new remuneration policy, which received 93% support at the 2022 AGM, will see the group return to a more traditional structure for long-term incentives, with the first grant due to be made next year. It said there were historical reasons for the vote at last year’s AGM and that it now had strong shareholder agreement on the forward structure and approach. Informa has also undertaken a significant refresh of its board, including the appointment of three new non-executive directors.

What’s the view of voting agencies? Glass Lewis believes shareholders can be satisfied with the response of the company to the dissent and recommends they vote in favour of the annual remuneration report.

How’s the company doing on diversity? At the end of 2022, Informa had five female directors and one board member from a non-white minority ethnic background.