Running a FTSE 100 company like this is thirsty work, but did the CEO earn his generous payout? Here's what the experts think.
The £7.9 million in pay and bonuses awarded to Diageo (LSE:DGE) boss Ivan Menezes will be in the spotlight when the Guinness and Smirnoff drinks business hosts its AGM.
Menezes, who was appointed in 2013, benefited from the company’s annual incentive scheme paying around £2.4 million based on 94% of the maximum opportunity. His single figure remuneration came to just over £6 million in the previous year.
The London meeting, which will also be available to shareholders through a live webcast, follows a year in which annual operating profits rose by 18.2% to £4.4 billion.
When: 2.30pm, Thursday 6 October.
Where: etc.venues St Paul’s, 200 Aldersgate, London EC1A 4HD.
How to participate: The AGM is being held as a hybrid meeting. Shareholders attending electronically will be able to submit questions and vote on resolutions via a live webcast using the Lumi platform. Questions in advance of the meeting can be sent to firstname.lastname@example.org. More AGM details can be found here.
Who’s in the chair? Former Bacardi boss Javier Ferrán was appointed in January 2017. He also leads the board of British Airways owner International Airlines Group.
How did the company do in the year to 30 June? Net sales of £15.5 billion were 21.4% higher, driven by the pandemic recovery of the on-trade, resilient consumer demand in the off-trade and market share gains by the Guinness and Smirnoff owner. Operating profit of £4.4 billion rose 18.2% and basic earnings per share lifted 23.2% to 140.2p. A final dividend of 46.82p a share is due to be paid on 25 October and will result in a 5% increase in the total dividend for the year to 76.18p.
How have shares performed? Up 2% to 3,530.5p (3,759p on Thursday).
How much is the boss paid? Ivan Menezes, who is paid in US dollars, is on a salary of $1.76 million (£1.55 million) after receiving a 3% increase for this year. His total remuneration for 2021/22 came to $10.5 million (£7.9 million, based on the 30 June exchange rate). This included $3.2 million (£2.4 million) in cash and shares after the annual incentive scheme paid 93.75% of the maximum based on the full achievement of all three financial measures.
Diageo’s remuneration report said these were “very stretching” and reflected higher growth percentages than pre-Covid levels for net sales and operating profit. The 2019 long-term incentive plan accounted for $5.1 million (£3.85 million) after the vesting of performance shares and share options at around 60% of the maximum opportunity.
What’s the view of voting agencies? Glass Lewis notes that the company has lowered performance targets attached to awards made under its long-term incentive scheme. These are now in the range of 4.5% and 8.5% for net sales and 5% and 12% growth for underlying profit, compared with 5%-9% and 6.5%-13.5% respectively for 2021/22. The voting advisory firm believes the company should refrain from such changes going forward, but acknowledges the remuneration committee can still exercise discretion on the vesting outcome. In the annual report, Diageo adds that "performance targets are set to be stretching yet achievable, and take into account the company’s strategic priorities and business environment”.
How did last year’s AGM go? The directors’ remuneration report was approved with 96.04% of votes in favour.
How’s the company doing on diversity? Diageo reported 64% female board representation and 44% among its senior leadership. In addition, 45% of Diageo’s board and 41% of its leadership including the executive committee is ethnically diverse.
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