How would you vote on this £100m bonus and FTSE 100 wage policy?
This bonus scheme remains controversial, but pay at this mid-cap firm has been waved through before. Here's what the voting agencies think will happen this time. A new recruit at a blue-chip giant is also under the microscope.
8th September 2023 08:36
by Graeme Evans from interactive investor
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The prospect of a £100 million bonus continues to be the motivation for Frasers Group (LSE:FRAS) boss Michael Murray after he worked for nothing during the 2022/23 financial year.
He has also waived his £1 million salary for this year in order to focus on delivering the award targets of the Executive Share Scheme, under which he has been granted 6.7 million shares that will vest after four years dependent on a £15 share price.
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The scheme has been controversial, with voting agency Glass Lewis concerned by the use of metrics that may largely reflect economic factors beyond the control of executives. However, it has recommended voting in favour of the remuneration report at this year’s AGM.
Diageo
When: 2.30pm, Thursday 28 September.
Where: etc.venues St Paul’s, 200 Aldersgate, London EC1A 4HD.
How to participate: The Diageo (LSE:DGE) AGM is a combined physical and electronic meeting, using the online Lumi platform with an additional telephone facility for questions. Questions in advance of the AGM should be sent to agm.2023@diageo.com and proxy voting instruction returned no later than 2.30pm, Tuesday 26 September 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 Consolidated Airlines Group SA (LSE:IAG).
How did the company do in the year to 30 June? Net sales of £17.1 billion increased 10.7%, with operating profit up 5.1% to £4.6 billion. Basic earnings per share rose by 17.6% to 164.9p and the company declared the 12 October payment of a final dividend of 49.17p a share, an increase of 5% on a year earlier and bringing the total for the year to 80p a share.
How have shares performed? Down 4% at 3,379p (3,175p on Thursday).
How much is the boss paid? Debra Crew was named this year as successor to Sir Ivan Menezes, who oversaw a period of significant growth during his decade as chief executive. He passed away shortly before his planned retirement at the end of June. The starting salary for Crew, who was previously Diageo’s chief operating officer, is slightly below her predecessor at $1.75 million (£1.4 million). Her maximum annual bonus opportunity is 200% of salary and she receives an annual grant of long-term incentive shares worth up to 500% of salary. For 2022/23, Diageo’s annual report showed Sir Ivan’s single figure remuneration amounted to $12.7 million (£10.6 million).
What’s in the new remuneration policy? The policy last approved in 2020 with 93.12% of votes in favour is largely unchanged. Departing executive directors will now be required to hold 100% of their in-service shareholding level, which for the chief executive is up to 500% of salary, for two years post-exit.
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How did last year’s AGM go? The annual remuneration report was backed with 94.79% of votes in favour.
What’s the view of voting agencies? Glass Lewis recommends shareholders back the annual remuneration report and the binding vote on the new three-year remuneration policy.
How’s the company doing on diversity? Diageo said Sir Ivan was an “inspirational champion” for both women and ethnic minorities in business. There were no women on Diageo’s executive committee in 2008 whereas today over half are women, including his successor as chief executive, the chief financial officer and presidents of Diageo’s largest markets – North America, Europe and India. Almost half of the executive committee are ethnically diverse. At board level, the company reports 73% female representation while 36% of directors are ethnically diverse.
Frasers Group
When: 9am, Wednesday 20 September.
Where: Unit D, Brook Park East, Shirebrook, NG20 8RY.
How to participate: Proxy voting forms need to be returned no later than 9am, Monday 18 September. More AGM details can be found here.
Who’s in the chair? Former Nike director David Daly, who was appointed in 2017.
How did the company do in the year to 30 April? Revenues of £5.56 billion were 15.8% higher, a rise of 1.3% when excluding acquisitions, currency and an extra trading week. Pre-tax profits rose 40.7% to £478.1 million, within the company’s £450 million-£500 million guidance, and adjusted earnings per share lifted 17p to 70.9p. There was no dividend but the company bought back £155.3 million of its shares during the year.
How have shares performed? Up 12% at 768.5p (801.5p on Thursday).
How much is the boss paid? Michael Murray, who was appointed in May 2022, waived his £1 million salary for the 2022/23 financial year and has done so again for the current year. He said this was in order to focus on the targets of the Executive Share Scheme, under which he has been granted 6.7 million shares that will vest after four years dependent on a share price of £15 for at least 30 consecutive trading days and other conditions. Murray, who played a key role in developing the company’s strategy before being named one of the youngest bosses in the FTSE 350 index, is this year eligible for an annual bonus worth up to 200% of salary.
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How did last year’s AGM go? The annual remuneration report was approved with 87.77% of votes in favour, aided by the support of major shareholder and founder Mike Ashley.
What’s the view of voting agencies? Glass Lewis continues to have reservations about the Executive Share Scheme, including the use of metrics that may largely reflect economic factors beyond the control of executives rather than their own individual performance. Despite its concerns, the agency says the interests of executives and shareholders are “sufficiently aligned” during the year under review and recommends support for the advisory vote on the annual remuneration report.
How’s the company doing on diversity? Board-level gender diversity has been 29% for the past four years, with two female directors. There is currently no representation from ethnic minority backgrounds. The board plans to appoint two additional directors in order to address gender and ethnic diversity requirements, as well as to fill identified skills gaps.
Kainos
When: 10.30am, Thursday 21 September.
Where: Kainos House, 4-6 Upper Crescent, Belfast, BT7 1NT.
How to participate: Proxy votes can be cast electronically via www.signalshares.com but must be received no later than no later than 10.30am, Tuesday 19 September. More AGM details can be found here.
Who’s in the chair? Tom Burnet, who was appointed in September 2019 having joined the Kainos Group (LSE:KNOS) board at the company’s IPO in July 2015. He is also chair of Baillie Gifford US Growth Trust.
How did the company do in the year to 31 March? The IT provider, which specialises in digital services and the Workday platform, grew revenues by 24% to £374.8 million and pre-tax profits by 18% to £54.3 million. A dividend of 16.1p is due to be paid on 20 October, resulting in an 8% increase in the total for the year to 23.9p.
How have shares performed? Unchanged at 1,382p (1,228p on Thursday).
How much is the boss paid? Chief executive Brendan Mooney, who has run the business for 22 years after joining Kainos in 1989 as a trainee software engineer, is stepping down after the AGM. He will be replaced by Russell Sloan, the digital services director. Mooney, who is the company’s largest shareholder with an 11.4% stake, received total remuneration of £580,000 for 2022/23. This included his salary of £227,000 and an annual bonus of £184,000 based on 59% of the maximum opportunity. Long-term incentives awarded in 2019 vested in full and contributed £153,000 to the final figure. The highest paid executive was Richard McCann, who got £630,000 in his dual roles of chief financial officer and chief operating officer.
How did last year’s AGM go? The annual remuneration report was approved with 97.24% of votes in favour. The new three-year remuneration policy got 97.56% 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? A third of the board is female. The company is yet to meet the recommendations of the Parker Review to have one or more directors from a diverse ethnic background by 2024.
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