Interactive Investor

FTSE 100 firm feels wrath of angry shareholders

17th February 2023 09:09

by Graeme Evans from interactive investor

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Boardroom salaries remain an emotive issue and shareholders have used this year’s AGMs to make their feelings known. We also look at two upcoming votes and how the results might go.

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Shareholders have kept up the pressure over boardroom pay after FTSE 100 listed caterer Compass Group (LSE:CPG) and digital publisher Future (LSE:FUTR) suffered protest votes at their AGMs.

The dissent at Compass followed an increase in the chief executive’s future long-term incentive awards from 300% to 400% of salary. The change was part of the new three-year remuneration policy approved at last year’s AGM, but some shareholders remain unhappy as 30% of votes went against this year’s annual pay report.

About 17% of votes were cast against the Future remuneration report, although this was an improvement on the 2022 AGM when the resolution did not pass due to concern about the potential for significant pay-outs under the company’s Value Creation Plan.

As we reported last month, Future has taken on board shareholder concerns by reverting to a more “market-typical” performance share plan.

Paragon Banking Group

When: 9am, Wednesday 1 March.

Where: UBS, 5 Broadgate, London, EC2M 2QS.

How to participate: The deadline for proxy voting instructions and for the submission of questions by Paragon Banking Group (LSE:PAG) shareholders unable to attend the meeting is Monday 27 February. More AGM details can be found here.

Who’s in the chair? Robert East is hosting his first AGM, having been appointed last September.  He held senior roles at Barclays and was also chief executive of consumer finance business Cattles, where he led the restructuring and wind-down of its operations.

How did the company do in the year to 30 September? The FTSE 250-listed specialist banking group increased total new lending by 23.6% to £3.21 billion, with mortgage advances up 17.2% to £1.91 billion. Operating profit before fair value accounting items increased by 16.4% to £226 million and underlying earnings per share by 17.9% to 69.9p. The total dividend rose 9.6% to 28.6p, including a final dividend of 19.2p for payment on 3 March. It also announced a buyback of £50 million for the current financial year.

How have shares performed? Down 26% at 394.8p (596.5p on Thursday)

How much is the boss paid? Under the company’s new remuneration policy, Nigel Terrington is to receive fixed pay of £737,000 in cash and £184,000 paid in shares released over five years. His total remuneration for 2021/22 came to £3.45 million, which included an annual bonus of £905,000 based on 96% of the maximum. It also included awards granted in 2020 under the performance share plan, which vested at 93.13% with a value of £1.6 million.

What’s in the new remuneration policy? A simplified fixed pay structure replaces the role-based allowance, with 20% now delivered in shares to be released over a five-year period. The maximum bonus opportunity will be reduced from 150% of base salary to 98% of total salary and the performance share plan from 180% of base salary to 118% of total salary. The changes mean a greater proportion of the pay package will be delivered in shares and it also removes the potential for a breach of bonus cap rules during strong years.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report, as well as the binding vote on the new remuneration policy.

How did last year’s AGM go? The annual remuneration report was approved with 97.48% of votes in favour. The remuneration policy was backed in 2020 with 74.33% of votes.

How’s the company doing on diversity? Female representation of 38.1% at board and senior management level exceeds the original Hampton-Alexander Review targets and the group is aligned to the objectives of the FTSE Women Leaders Review. The company now complies with the Parker guidance on ethnic diversity on boards.

Victorian Plumbing

When: 9.30am, Thursday 2 March.

Where: PwC, No 1 Spinningfields, 1 Hardman Square, Manchester M3 3EB.

How to participate: Proxy voting instructions must be received by Victorian Plumbing Group (LSE:VIC) no later than 9.30am, Tuesday 28 February. Questions in advance of the meeting can be submitted by email to ir@victorianplumbing.co.uk. More AGM details can be found here.

Who’s in the chair? Philip Bowcock was chief executive of William Hill between 2016 and 2019 and before that its chief financial officer.

How did the company do in the year to 30 September? The online bathrooms retailer posted broadly flat revenues of £269.4 million, reflecting a decline in total orders of 3% and an increase of 3% in average order value. Adjusted earnings fell by 51% to £19.5 million, impacted in the first half by higher product and container shipping costs. Pre-tax profits fell 40% to £11.8 million, but significant operating cash flows led to a maiden final dividend of 1.1p a share and a special dividend of 1.7p a share due for payment on 10 March.

How have shares performed? Down 85% to 36.35p (89.25p on Thursday).

How much is the boss paid? The £250,000 salary of founder, chief executive and majority shareholder Mark Radcliffe is unchanged for the new financial year. For the 2021/22 financial year, his total remuneration amounted to £335,000 after the award of a £75,000 bonus. Chief financial officer Paul Meehan, who is on a salary of £315,000, received £414,000 in total.

How did last year’s AGM go? The company is not required to seek formal shareholder approval of its remuneration policy under AIM regulations. However, it did present it to shareholders for an advisory vote and received 99.05% of votes in favour. The annual remuneration report got 99.84% support.

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