Interactive Investor

Four companies face battle to get pay plans approved

27th January 2023 10:06

Graeme Evans from interactive investor

A year ago, this trio of large companies faced a backlash from shareholders. Will it be another battle for their approval this year? Another household name has a generous bonus scheme scrutinised.

A £1.2 million bonus for the boss of easyJet (LSE:EZJ) will be among the pay deals under scrutiny when four leading FTSE 350-listed companies host their AGMs in the next month. 

Despite Johan Lundgren’s bonus being reduced to reflect summer disruption for passengers, he still ended up landing a total remuneration package of £3 million from a loss-making year.

Compass Group (LSE:CPG), Future (LSE:FUTR) and Mitchells & Butlers (LSE:MAB) are also hosting their AGMs, with all three companies doing so on the back of big protest votes at their previous year’s shareholder events.


When: 11am, Wednesday, 8 February.

Where: 121 - 141 Westbourne Terrace, Paddington, W2 6JR.

How to participate: Proxy voting instructions need to be returned no later than 11am, Monday 6 February. The notice of AGM can be found on page 184 of the annual report.

Who’s in the chair? Richard Huntingford, who has held the role since 2018, served as chief executive during a 20 year career at media company Chrysalis.

How did the company do in the year to 30 September? Revenues at the magazines and online media group rose 36% to £825.4 million, reflecting organic growth of 2% and the impact of acquisitions. Operating profit improved 39% to £271.7 million on an adjusted basis, resulting in earnings per share 24% higher at 163.5p. A final dividend of 3.4p a share, which represents an increase on the previous year’s 2.8p, is due to be paid on 14 February.

How have shares performed? Down 64% to 1,320p (1,585p on Thursday).

How much is the boss paid? Zillah Byng-Thorne’s salary increased by 4% in November to £598,000. Her total remuneration figure for 2021/22 came to £2.78 million, down from £8.4 million the year before due to a significant fall in the vesting of long-term incentives to £1.1 million. The annual bonus contributed just over £1 million in cash and shares, an outcome based on 88% of the maximum opportunity. Byng-Thorne has told the company that she intends to step down from her role by the end of this year, having served as chief executive since 2014. 

How did last year’s AGM go? The directors’ report on remuneration did not pass after 55.4% of votes went against the resolution. Concerns focused on the treatment of outstanding incentives held by the outgoing finance boss and the structure of the Value Creation Plan, which is open to all employees and capped at a total pot of £95 million each year. As a result of the resolution’s failure, Future is required to submit its directors’ remuneration policy to a binding vote of shareholders at this year’s AGM.

How has the company responded to the dissent? It engaged with 42 shareholders owning 80% of the company, as well as three shareholder advisory bodies. Pay committee chair Mark Brooker, who has been in the role since October 2021, said the company had designed a policy for 2023-25 that reverts to a more typical structure for the FTSE main market.

What’s happened to the Value Creation Plan? Brooker said feedback on the three-year scheme, which was approved by 64.3% of shareholders at the 2021 AGM, ranged from strong support for its pay-performance linkage to those unhappy with its highly-leveraged nature and potential for very significant payouts. His committee decided not to curtail the scheme, partly because it aligns the interests of 3,000 staff with shareholders. However, it has made modifications and no further awards are due to be made to executive directors. It is requesting approval at the AGM for a more “market-typical” performance share plan. This reverts to award levels as a percentage of salary rather than fixed number of shares and includes a reduction to the exceptional maximum opportunity from 400% to 300% of salary.

What’s the view of voting agencies? Glass Lewis has previously criticised the VCP for extremely large pay-outs based solely on shareholder value creation, which may reflect market forces rather than company or management performance. However, it has recommended shareholders back this year’s annual remuneration report and the new three-year remuneration policy.

How’s the company doing on diversity? The board has 44% female representation, including two executive directors. It does not currently meet the Parker Review recommendation to have at least one director of colour by no later than 2024.


When: 12 noon, Thursday 9 February.

Where: Rugby House, Twickenham Stadium, 200 Whitton Road, Twickenham, TW2 7BA.

How to participate: Online or postal proxy voting instructions must be received by 12 noon on Tuesday 7 February. More AGM details can be found here.

Who’s in the chair? Ian Meakins, the former chief executive of Wolseley, Travelex and Alliance Unichem, took on the role in December 2020.

How did the company do in the year to 30 September? Underlying revenues at the contract catering company rose 37.5% to £25.8 billion and operating margin improved by 170 basis points to 6.2%. This resulted in an 87.5% rise in operating profit to £1.59 billion. Earnings per share more than doubled to 63p and a final dividend of 22.1p a share for payment on 2 March means an increase for the year of 125% to 31.5p. It also announced £750 million of buybacks.

How have shares performed? Up 20% to 1,805p (1,911p on Thursday).

How much is the boss paid? Dominic Blakemore’s salary increased this month by 4.8% to £1.1 million. His total remuneration came to £3.3 million for 2021/22, including £2.1 million in cash after the annual bonus scheme paid 100% of the maximum opportunity. North America boss Gary Green, who is paid in dollars, got £3.3 million. The pandemic impact on performance meant long-term incentives lapsed for the third year in a row. The remuneration committee considered the potential use of discretion to reflect the success of the business recovery, growth trajectory and record business retention. Whilst it believed that some level of vesting was justified, it said it was mindful of shareholder and proxy agency views, the social and economic environment, as well as the wider stakeholder experience. 

How did last year’s AGM go? The annual remuneration report got 87.98% of votes in favour, reducing to 67.50% for the new three-year remuneration policy. The dissent followed an increase in the multiple of salary on future long-term incentive awards from 300% to 400% for the chief executive. Having sought shareholder feedback, the remuneration committee said it continued to back the changes as it believes the increase will allow the company “to better align with the market and to enhance the retention and motivation of our best talent”.

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? Female directors on each of the board and executive committee was 33% and 40% respectively at the end of the financial year. The composition of the board exceeds the Parker Review recommendations aimed at improving ethnic diversity.


When: 11am, Thursday 9 February.

Where: Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF.

How to participate: The company will be offering facilities for shareholders to attend and vote at the AGM electronically and to ask questions in real time should they wish to do so. Shareholders are encouraged to submit their voting instructions as soon as possible, even if they intend to participate in the AGM in person or electronically. The deadline for doing so is 11am, Tuesday 7 February. More AGM details can be found here.

How will EU ownership rules impact shareholders? EU regulations require all airlines with EU operating licences, including easyJet, to be majority owned and controlled by nationals of one of the member states of the EU. To ensure that it keeps to the permitted maximum 49.5% of non-EU ownership, easyJet has activated its EU ownership contingency plan where it suspends voting rights in respect of certain shares. This is on a "last in, first out" basis, with those affected notified by post. More details on the contingency plan can be found here.

Who’s in the chair? Former Royal Bank of Scotland and RSA Insurance chief executive Stephen Hester has been in the role since December 2021.

How did the company do in the year to 30 September? Revenues rose by 296% to £5.77 billion after a 242% increase in the number of passengers flown to 69.7 million. Costs increased by 129% to £5.95 billion due to higher flown capacity, leading to a loss of £208 million. This compared with just over £1 billion the year before. There was no dividend payment.

How have shares performed? Down 54% to 296.4p (515p on Thursday).

How much is the boss paid? Johan Lundgren’s salary for this year has increased by 5.4% to £780,000, the first rise since January 2020. His single figure remuneration for 2021/22 came to £3 million, up from £794,000 the year before, after an annual bonus of £1.2 million in cash and shares based on 81.12% of the maximum opportunity. The bonus was measured 30% on underlying earnings, 50% on a scorecard of key performance targets such as free cash flow, cost control, customer feedback and ancillary revenues, and 20% on individual performance. The scorecard outcome was 33.625% out of 50% but the remuneration committee reduced this by 2.5 percentage points to reflect the airline’s summer operational challenges. Long-term incentives granted in 2019 lapsed, but the company made the first award of £925,000 under its new restricted share plan, which will vest in December 2024 and is subject to certain underpins being met.

How did last year’s AGM go? The three-year remuneration policy was approved but with 26.62% of votes cast against the resolution. The company said this reflected a small number of shareholders having different expectations on award levels, vesting periods and underpins. It said the updated policy and new restricted share plan, which offers the chief executive 125% of salary, was beneficial for long term strategic decision-making and helped to retain and motivate management to drive the performance of the business.

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? Four female directors accounted for 36.4% of board membership at the end of September. The board continues to have one director from an ethnic minority background in line with the Parker Review recommendations.

Mitchells & Butlers

When: 9am, Wednesday 8 February.

Where: 27 Fleet Street, Birmingham B3 1JP.

How to participate: Shareholders can attend in person or will be able to listen to the AGM proceedings remotely via a listen-only dial-in facility. They need to submit questions in advance to by 9am on Monday 6 February. The same deadline applies to the receipt of proxy voting instructions. More AGM details can be found here.

Who’s in the chair? Bob Ivell, who has over 40 years of experience in the food and drink industry, was appointed to the board in May 2011.

How did the company do in the year to 24 September? The pub chain’s revenues of £2.2 billion were double the year before, with like-for-like sales up 1.1% against the pre-pandemic 2019 financial year. Pre-tax profits of £8 million compared with a loss of £42 million in 2021 and earnings per share of 2.2p were up from a 11.5p loss previously.

How have shares performed? Down 43% to 151.6p (163p on Thursday).

How much is the boss paid? Phil Urban’s base salary for this year has increased by 5% to £579,000. His total remuneration for 2021/22 came to £810,000, including £182,241 in cash and shares after the annual bonus scheme awarded 33.4% of the maximum opportunity. Long-term incentives granted in 2020 lapsed as the pandemic impacted on performance metrics. An award from 2019 that did vest the previous year was subject to an underpin that required shares to equal or exceed 272p on any one day from 25 November 2021 up to and including 25 May 2022. The shares reached 268p in February, prior to the market’s wider sell-off in the spring. The board has decided that it is appropriate to extend the time period under which the underpin would need to be satisfied to November 2023.

How did last year’s AGM go? The annual directors’ remuneration report was backed by 78.5% of votes amid concerns about the level of the restricted share plan (RSP) award for the chief financial officer. The re-election of Ivell, whose appointment now extends beyond the recommended nine-year tenure, was opposed by 27.72% of votes.

How’s the company doing on diversity? Two independent non-executive directors, representing 22% of the board are female, one of whom is the senior independent director. It has not disclosed a plan for increasing board-level ethnic diversity in order to meet Parker Review targets.

What's the company's response to corporate governance concerns? It points out that Odyzean Group, which owns 57% of shares, indicated at the company’s fundraising in 2021 that it expected the board to focus on retaining and acquiring skill sets that are needed to optimise the development of the business. M&B added: “The company has not received any indication of a change in approach on these issues by the Odyzean Group.” On Ivell’s tenure, it said no further consideration was given to the matter in 2022. “This will remain the case while the company continues to deal with the rebuilding of its business.”

What’s the view of voting agencies? Glass Lewis recommends voting against the annual remuneration report, noting the committee's decision to continue to grant RSP awards of 100% of base salary to the CFO as this does not represent the recommended 50% discount to awards granted to him under the previous long-term incentive scheme. The agency is also against the re-election of Ivell on the grounds of insufficient response to shareholder dissent and ongoing concerns over gender diversity, board refreshment and poor succession planning

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