Interactive Investor

Massive shareholder backlash at this housebuilder's AGM

19th May 2023 10:07

by Graeme Evans from interactive investor

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Investors showed how to get your voice heard by voting against this company’s remuneration report in vast numbers. Will pay be a sticking point at meetings of two more big names?

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Vistry Group (LSE:VTY) shareholders have made their feelings known following the housebuilder’s retrospective change to the criteria used in its long-term bonus scheme.

Thursday’s AGM saw 47.08% of votes cast against the company’s remuneration report after chief executive Greg Fitzgerald’s total pay of £2.48 million included £551,000 from the vesting of long-term incentives.

A third of the award is calculated based on earnings per share, which the Bovis owner measured on just 2022 performance rather than the usual three years.

The company told shareholders last year it would consider the use of discretion after the outturns of previous long-term incentive plans, or LTIPs, awards were disrupted by the pandemic.

In this year’s annual report, Vistry said the vesting level was appropriate in the context of a strong financial performance and also aligned with the wider shareholder experience.

Among yesterday’s other AGMs, the resolutions at Legal & General Group (LSE:LGEN) and Lloyds Banking Group (LSE:LLOY) were passed with high levels of support.

Page Group

When: 9.30am, Thursday 1 June.

Where: 200 Dashwood Lang Road, Bourne Business Park, Addlestone, Surrey KT15 2NX.

How to participate: Proxy voting instructions need to be returned no later than 9.30am, Tuesday 30 May. More details for PageGroup (LSE:PAGE)'s AGM can be found here.

Who’s in the chair? Angela Seymour-Jackson, who previously held executive director roles with Aegon UK, RAC Motoring Services and Aviva UK, was appointed in May 2022.

How did the company do in 2022? Revenues of £1.99 billion were 21.1% higher and led to a 16.4% rise in operating profit to a record £196.1 million. Earnings per share lifted 17.5% to 43.7p. A final dividend of 10.76p a share is due to be paid on 19 June, resulting in a total for the year of 42.38p when including October’s special dividend payment of 26.71p.

How have shares performed? Down 29% to 461.2p (440.6p on Thursday).

How much is the boss paid? Nicholas Kirk, an internal candidate who succeeded Steve Ingham on 1 January, is on base pay of £600,000. His incentive opportunity of 375% of salary is in line with that of the former CEO. He has three decades service with the group, having joined Michael Page as a consultant in 1995. The salary of chief financial officer Kelvin Stagg has increased by 8% to £414,000, as the company says his pay has fallen behind market rates at a time when Page needs stability and retention during the CEO transition. His future incentive opportunities are now in line with the CEO at 375% of salary. 

And the former CEO? Ingham received a total of £2.3 million from his final year in charge, including a salary of £658,400 and variable pay of £1.48 million in cash and shares. The three-year calculations behind Ingham’s 60.1% incentive outturn included a maximum return from gross profit growth against competitors but nothing for cumulative earnings per share due to the impact of the pandemic. Ingham spent 36 years with the business, the last 17 as CEO when the business tripled its headcount and gross profit, with operations now in 37 countries. His highest pay figure of the past decade was in 2018, when he got £4.3 million.

How did last year’s AGM go? The annual remuneration report was approved with 93.96% of votes in favour.

What’s in the new remuneration policy? The 2020 remuneration policy was approved with the support of 90.71% votes cast. Page will continue to operate the Executive Single Incentive Plan (ESIP), which was introduced six years ago and has a structure that is less common for FTSE companies. The remuneration committee believes it is the right one for its cyclical sector as awards are based on performance over a three-year period and shares are subject to continued holding periods. It said: “The ESIP is motivational, trusted by our executives and its key features have subsequently been cascaded to lower levels of leaders within the business to drive alignment and consistency in the way we operate reward.”

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’s the company doing on diversity? Female representation at board level was 50% at the end of 2022, with 30.8% in senior management. The company meets the Parker Review recommendation of one director from a minority ethnic background.

Melrose Industries

When: 11am, Thursday 8 June.

Where: Butchers’ Hall, 87 Bartholomew Close, London EC1A 7EB.

How to participate: Proxy voting instructions must be returned by 11am, Tuesday 6 June. More details for Melrose Industries (LSE:MRO)' AGM can be found here.

Who’s in the chair? Justin Dowley was appointed in January 2019, having previously served as a non-executive director from September 2011. This means the former head of investment banking at Merrill Lynch Europe has served on the board for longer than the recommended nine years. In 2020, the board approved his extended tenure up to this year in order to facilitate succession planning arrangements. A further and final extension for an additional two years is now being sought in order to provide “certainty and stability” through the completion of the demerger of the GKN automotive and powder metallurgy businesses.

How did the company do in 2022? Melrose said it traded ahead of expectations, leading to  revenues of £8.2 billion and a pre-tax profit of £384 million. It recorded adjusted earnings per share of 7p, up 126% on last year. The demerger of the GKN automotive, powder metallurgy and hydrogen businesses into separately-listed Dowlais completed after the year-end, leaving Melrose as the GKN aerospace operation. A second interim dividend of 1.5p a share was paid just prior to the demerger on 18 April, representing a 50% increase on last year’s final dividend. The total dividend for 2022 of 2.325p a share was 33% higher than last year.

How have shares performed? Down 18% to 282.2p (490.3p on Thursday).

How much is the boss paid? The salary of co-founder and chief executive Simon Peckham has been increased for 2023 by 5% to £596,000. Peckham, who was chief operating officer at the time of the company’s AIM flotation in 2003 and appointed chief executive from May 2012, got total remuneration of £1.2 million. This included the maximum bonus opportunity of 100% of salary. Melrose points out that Peckham’s overall pay was less than half, or over £1 million less than, the average FTSE 100 CEO annual remuneration in 2021. There was no long-term incentive arrangement due to vest in respect of 2022.

What’s in the new remuneration policy? Melrose is planning to lift the maximum bonus opportunity from 100% to 200% of salary. However, current executive directors will not receive the benefit of any increase for the three year duration of the policy. The change is being made with succession planning in mind, given the need to ensure a competitive package is in place to attract the best talent should the need arise. The current policy was approved by shareholders at the 2020 AGM with over 98% of votes cast in favour.

How did last year’s AGM go? The remuneration report was approved with 97.34% of votes in favour, with Dowley’s re-election backed with 93.44% support.

How’s the company doing on diversity? Gender diversity at board level at the end of 2022 was 40%. The company continues to meet the Parker Review target of having one director from an ethnic minority background on its board.

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