It won't be plain sailing for some FTSE 100 companies as shareholders prepare to vote on director pay and a special climate resolution. How much of a backlash will there be?
Andy Hornby’s £792,000 pay package as boss of Restaurant Group (LSE:RTN) looks set to divide shareholder opinion when the Wagamama chain holds its AGM.
Voting agency Glass Lewis has highlighted the misalignment between the “wider stakeholder experience and executive pay”, noting that dividends at the loss-making company are still on hold after the pandemic.
But Hornby received significant backing on Thursday when the group’s biggest shareholder praised management for navigating an “exceptionally tough industry backdrop”.
In other upcoming AGMs, Glencore's (LSE:GLEN) strategy for managing the decline of coal production will be in focus through a special shareholder resolution. The pay deals for recently appointed executives at Prudential (LSE:PRU) and Deliveroo (LSE:ROO) will also be in the spotlight.
When: 10.30am, Thursday 25 May.
Where: QEII Conference Centre, Broad Sanctuary, London SW1P 3EE.
How to participate: Shareholders can join the meeting in person or via the Lumi electronic platform. Questions in advance of the meeting should be sent to firstname.lastname@example.org. Proxy voting instructions must be lodged by 10.30am, Tuesday 23 May. More AGM details can be found here.
Who’s in the chair? Shriti Vadera joined the board in May 2020 and was appointed chair in January 2021. She spent 15 years in investment banking with SG Warburg/UBS before serving as a minister in the UK government from 2007 to 2009.
How did the company do in 2022? The first full year for the group as an Asia and Africa focused business saw sales rise 5% to $4.39 billion (£3.5 billion) against a backdrop of Covid-19-related disruption and economic volatility. Operating profit based on longer-term investment returns was 4% higher at $3.37 billion. A second dividend of 13.04 cents per share (10.46p) is due on Monday, lifting the total by 9% to 18.78 cents per share.
How have shares performed? Down 12% to 1,127.5p (1,181.5p on Thursday).
How much is the new boss paid? Anil Wadhwani, who started as chief executive on 25 February, receives a base salary of US$1.57 million. His maximum bonus opportunity for this year is 200% of salary, with 40% deferred for three years. Long-term incentive awards will have a face value on their grant of 400%. Any awards and payments that he forfeited from previous employer Manulife when joining Prudential will be replaced on a like-for-like basis. Details will be disclosed in next year’s annual report.
And the former boss? Mark FitzPatrick’s single figure remuneration for 2022 amounted to US$5.5 million, having been appointed interim chief executive in April following the departure of Mike Wells. He got an annual bonus payment of $2.6 million based on 98% of the maximum opportunity and the 45.5% vesting of long-term incentives granted in 2020 contributed just over $1 million to his final total for 2022.
What’s in the new remuneration policy? There are minimal changes, which include the introduction of bonus deferrals in cash rather than shares. The company said this was more in line with many of its Asian peers as it seeks to attract talent in key markets in the region. Overall remuneration arrangements remain substantially aligned to typical UK-listed practice, despite the group’s strategic and operational shift to Asia.
What’s the view of voting agencies? Glass Lewis recommends shareholders support the annual remuneration report and the binding vote on the new remuneration policy.
How did last year’s AGM go? The annual remuneration report was approved with 93.09% of votes in favour.
How’s the company doing on diversity? Female representation on the board increased to 38% at the start of the year and will improve further to 45% after the AGM. The company meets the requirements of the Parker Review on ethnic diversity.
When: 11.30am (Central European Time), Friday 26 May.
Where: Theater-Casino Zug, Artherstrasse 2-4, Zug, Switzerland.
How to participate: The deadline for the return of proxy voting forms is 11.30am (Central European Time), Wednesday 24 May. More AGM details can be found here.
Who’s in the chair? Kalidas Madhavpeddi, who was appointed in February 2020, has over 40 years of mining industry experience, including as CEO of CMOC International.
How did the company do in 2022? The high and volatile commodity price environment helped the group to generate record profitability for the year. Adjusted earnings of $34.1 billion rose by $12.8 billion compared with a year earlier and net income increased $9.8 billion to $18.9 billion. The company made $8.5 billion of shareholder returns, up from $2.8 billion in 2021. These comprised a $3.4 billion base distribution from 2021 cash flow, along with $5.1 billion of top-up returns encompassing a $1.5 billion cash element and $3.6 billion cumulative share buybacks which completed in February.
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How have shares performed? Up 45% to 552.4p (427.6p on Thursday).
How much is the boss paid? The base salary of Gary Nagle, who succeeded Ivan Glasenberg as chief executive in 2021, has been increased by 3% to $1.85 million. His single figure remuneration for 2022 came to $6.1 million, which included an annual bonus of $4.2 million based on 93.6% of the maximum opportunity. The outcome was reduced from 98.5% after downward discretion was applied following four fatalities in the year. Half of Nagle’s annual bonus outcome is deferred into shares for three years. No long-term incentive awards were due to vest during the year.
How did last year’s AGM go? The annual remuneration report was approved with 93.53% of votes in favour. The 2021 Climate Progress Report saw almost a quarter of votes go against the company due to concerns over coal production and the scale of the 50% emissions reduction target by 2035. However, Glencore said the overwhelming majority of shareholders reiterated their support for the company’s “responsibly managed coal decline strategy”.
Is there a climate-related vote this year? As well as the non-binding vote on the 2022 climate progress report, a resolution has been brought by the Australasian Centre for Corporate Responsibility in conjunction with ShareAction. It calls on the mining giant to make disclosures by next year’s AGM that include how its thermal coal production plans align with the Paris Agreement’s objective of limiting global temperatures rises to 1.5C. The company is opposed to this resolution, arguing that its climate progress report sets out details of the company’s strategy in respect of its coal portfolio.
What’s the view of voting agencies? Glass Lewis recommends shareholders go against the company and vote in favour of the special climate resolution. It believes the disclosures will be useful for shareholders when evaluating the company's 2024 climate plan. The voting agency is in favour of the annual remuneration report.
How’s the company doing on diversity? The eight-strong board includes three female directors and one from a minority ethnic background.
When: 9.30am, Wednesday 24 May.
Where: Freshfields Bruckhaus Deringer LLP, 100 Bishopsgate, London EC2P 2SR.
How to participate: A live AGM webcast is available but shareholders will not be able to ask questions or vote using this facility. Questions in advance of the meeting should be sent to email@example.com by 5pm on Friday 19 May. The deadline for the return of proxy voting instructions is 9.30am, Monday 22 May. More AGM details can be found here.
Who’s in the chair? Claudia Arney began her executive career at McKinsey before roles at Pearson, the Financial Times, Goldman Sachs and HM Treasury. She is a former non-executive director at Aviva, Halfords and Ocado.
How did the company do in 2022? Revenues rose 14% to £1.97 billion after a 9% increase in gross transaction value to £6.85 billion. Adjusted earnings were achieved ahead of target in the second half of last year, helping to narrow the underlying loss to £45 million from £100 million the year before. The overall loss for the year improved 11% to £294.1 million.
How have shares performed? Down 60% to 85.7p (107.3p on Thursday).
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How much is the boss paid? Will Shu’s basic salary is unchanged for this year at £600,000. He is not involved in the annual bonus scheme or long-term incentive scheme, but was awarded a pre-IPO grant of 27 million restricted stock units worth £105.6 million prior to the 390p a share listing. The award is multi-year with vesting through to April 2028, which Deliveroo says will help to ensure Shu is focused on long-term value for shareholders.
How much is the new finance boss paid? The salary of new chief financial officer Scilla Grimble, who joined the company from Moneysupermarket.com on 20 February, is £500,000. Her predecessor Adam Miller got total remuneration for 2022 of £664,000, including an annual bonus of £287,400 based on the target for adjusted earnings. There was no payment for growth in gross transaction value, which came in short of the 25% threshold due to a more challenging consumer environment than assumed in the plan. Grimble’s bonus opportunity will also be 180% of salary, with one-half of any payout in cash and the rest in shares deferred for three years. Long-term incentives have been granted with a face value of 500% of salary. This compares with the maximum limit under the company’s remuneration policy of 600%.
How did last year’s AGM go? The annual remuneration report received 99.01% of votes in favour, while the binding vote on the three-year remuneration policy got 96.24% support.
What’s the view of voting agencies?
Glass Lewis recommends shareholders support the advisory vote on the annual remuneration report.
How’s the company doing on diversity? Women account for 50% of the board, including the roles of chair, chief financial officer and senior independent director. At least one director is from a minority ethnic background, in line with the requirements of the Parker Review.
When: 11am, Tuesday 23 May.
Where: 5-7 Marshalsea Road, London SE1 1EP.
How to participate: Proxy voting instructions need to be returned no later than 11am, Friday 19 May. More AGM details can be found here.
Who’s in the chair? Ken Hanna, the former chief financial officer of Cadbury and Avis Europe, was appointed in January 2022.
How did the company do in the year to 1 January? Revenues of £883 million were 38.7% higher on a year earlier, driven by the performance of the Wagamama and Pubs businesses along with the benefit from the reopening of international travel. A one-off impairment charge of £117.5 million, partly due to write-downs in the value of its Leisure division, meant the pre-tax loss widened to £86.8 million. There was no dividend award.
How have shares performed? Down 68% to 31.2p (50.3p on Thursday).
How much is the boss paid? Andy Hornby’s base salary increased last month by 2.5% to £674,450. His total remuneration for 2022 amounted to £792,000, which included a bonus of £125,000 worth 12.7% of the maximum potential. This was due to the partial meeting of ESG targets such as energy consumption and customer satisfaction, whereas financial targets were missed. No payouts were made under the 2019 long-term incentive plan as neither of the performance conditions were met. Hornby got £1.2 million the previous year, when the bonus was reduced by 40% to £578,000 in order to take into account the receipt of government Covid support. No bonuses were paid for the 2019 and 2020 financial years.
How did last year’s AGM go? The annual remuneration report was approved with 67.68% of votes in favour. The protest followed the payment of executive bonuses despite the receipt of furlough support in 2021.
What’s in the new remuneration policy? The company is making limited changes to the policy last approved in October 2020.
What’s the view of voting agencies? Glass Lewis is critical of the decision to pay bonuses when the company did not meet any of its financial targets under the annual incentive scheme and has yet to reinstate dividends following their cancellation in 2020. “Our concerns are exacerbated by the misalignment between the wider stakeholder experience and executive pay.” It is also unhappy at the remuneration policy’s continued use of a restricted share plan, meaning long-term incentives lack an “objective, formula-based approach”. In response, the company said the awards are subject to a discretionary underpin based on underlying performance and delivery against strategy. However, Glass Lewis recommends shareholders oppose the remuneration report as well as the binding vote on the new remuneration policy.
What’s the view of shareholders? Hong Kong-based Oasis Management Company has reportedly described Hornby’s pay package as “disproportionate”. However, 19% long-term shareholder Columbia Threadneedle Investments remains supportive of the board and management, who it said had successfully navigated an “exceptionally tough industry backdrop”. Columbia added: “The board continues to receive our support as they assess the best options to deliver long-term shareholder value.”
How’s the company doing on diversity? At the year end, three women accounted for 38% of board roles.
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