Some of the biggest FTSE 100 companies will soon get a grilling from shareholders, and you can be part of the conversation. Here are the important talking points.
Ben van Beurden’s £9.7 million pay package in his final year as Shell (LSE:SHEL) chief executive will be among the hot topics when the oil giant holds its AGM in London this month.
As well as his 53% hike in remuneration in a year of soaring oil and gas prices, shareholders will be asked to consider the company’s energy transition progress.
Lloyds Banking Group (LSE:LLOY)’s AGM takes place in Glasgow, but for those watching the webcast there’s no facility to vote online or ask questions during the meeting.
Other upcoming AGMs include Legal & General Group (LSE:LGEN), Next (LSE:NXT) and Greggs (LSE:GRG), with bosses hoping to avoid the fate of Unilever (LSE:ULVR) after its AGM this week saw 58% of votes cast against the consumer goods company in its advisory vote on the directors’ remuneration report.
As we highlighted last month, concerns have been raised about Unilever’s big increase in pay for incoming CEO Hein Schumacher compared with the level awarded to his predecessor.
When: 9.30am, Thursday 18 May.
Where: Leicester Marriott Hotel, Smith Way, Grove Park, Leicester, LE19 1SW.
How to participate: Proxy voting instructions should be returned no later than 9.30am, Tuesday 16 May. More AGM details can be found here.
Who’s in the chair? Michael Roney, former Bunzl chief executive, has been in the role since August 2017.
How did the company do in the year to 28 January? Trading sales rose 8.4% to £5.15 billion, leading to a 5.7% increase in pre-tax profits to £870.4 million and earnings per share 8% stronger at 573.4p a share. A final dividend of 140p a share is due to be paid on 1 August, taking the total for the year to 206p.
How have shares performed? Down 13% to 6,636p (6,722p on Thursday).
How much is the boss paid? Base salaries for executives increased by 5% in February, compared with an average of 8.7% for the wider company. This has increased Simon Wolfson’s salary for 2023/24 to £908,000. His total remuneration for 2022/23 came to £2.5 million, which included £701,000 after the annual bonus scheme paid 54% of the maximum opportunity and £682,000 from the vesting of long-term incentives granted in September 2019 and March 2020. At the end of their three year performance period, the first award vested at 62% as Next’s total shareholder return ranked seventh out of 20 companies and the second vested at 30% with Next 10th out of 21. The previous year Wolfson got £4.2 million, including the maximum bonus of £1.24 million.
What’s happening to the remuneration policy? This is due for renewal at the AGM but is being left unchanged for another three years. The annual report said: “Next’s pay policies have remained consistent for a long period of time, over which they have served both shareholders and executives well. In the view of the committee, there would need to be very good reasons to change such a policy.” This means the chief executive’s maximum bonus opportunity will continue to be 150% of salary, with any payout above 100% in shares deferred for two years.
How did last year’s AGM go? The remuneration report was approved with 92.49% of votes in favour.
What’s the view of voting agencies? Glass Lewis supports the annual remuneration report but is unable to recommend that shareholders vote in favour of the new remuneration policy. This is due to concerns over the differential between pension entitlements for incumbent executive directors and new employees. It also calls for greater disclosure surrounding the pension rates available to other senior executives.
How’s the company doing on diversity? The company meets the Parker Review recommendations to have at least one board director from an ethnic minority background. Women account for half the company’s executive directors and 40% of the board.
Lloyds Banking Group
When: 11am, Thursday 18 May.
Where: SEC Armadillo, Exhibition Way, Glasgow, G3 8YW.
How to participate: The company’s articles of association require the AGM to be held in Scotland. The meeting will be available to watch remotely but the live webcast won’t have facilities for shareholders to ask questions or vote online. Proxy voting instructions must be received by Equiniti no later than 11am on Tuesday 16 May. More AGM details can be found here.
Who’s in the chair? Robin Budenberg, who spent 25 years advising UK companies while at S.G. Warburg/UBS investment bank, has held the role since January 2021. He previously managed the Government’s investments in UK banks following the 2008 financial crisis and is currently chairman of The Crown Estate.
How did the company do in 2022? Net income rose 14% to £18 billion, driven by higher interest rates and stronger levels of customer activity. This improvement alongside lower costs was offset by impairment charges stemming from the revised economic outlook, versus a significant write-back in 2021. Statutory pre-tax profits were unchanged at £6.9 billion, with earnings per share down slightly to 7.3p. A final dividend of 1.6p a share worth just over £1 billion is due to be paid on 23 May, resulting in a 20% rise in 2022’s total to 2.40p a share.
How have shares performed? Down 8% at 45.4p (45.36p on Thursday).
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How much is the boss paid? Charlie Nunn’s base salary is unchanged for this year at £1.14 million. He also gets a fixed share award of £1.05 million, which will be released in equal tranches over three years. Nunn’s single figure remuneration for 2022 amounted to £3.77 million, which included cash and shares worth £1.34 million after the annual bonus scheme paid 84.1% of the maximum opportunity. Pay committee chair Alan Dickinson said Nunn had made a strong start in his first full year as chief executive, having established a new growth strategy, leadership team and the priorities to transform the group’s culture.
How about other staff? Lloyds was one of the first large UK companies to make a one-off payment (£1,000) to help with increasing household costs. This amounted to £67 million. A pay package for 2023 included an 8%-13% increase for its 43,000 lowest paid staff and was equivalent to approximately a 6.3% increase on the overall pay bill.
What’s happening to the pay of the finance boss? Target compensation for William Chalmers at £2.9 million is lower than peers and between lower quartile and median compared to FTSE 30 companies. Recognising his more than three years’ experience with the group and his other responsibilities, the remuneration committee plans to increase his maximum bonus opportunity to 140% of salary to bring target compensation to £3.2 million.
What’s in the new remuneration policy? The company is returning to a performance based long term incentive plan, which is in line with the majority of its peers. The previous policy, which included a restricted share plan, only got 63.82% support at the 2020 AGM. Lloyds believes the new arrangements will mean stronger alignment with its strategic objectives and support a more demanding performance culture. Long-term awards will be weighted not less than 50% to financial measures, with 35% on strategy and 15% tied to environmental measures. The financial metrics will be return on tangible equity, relative total shareholder return and capital generation. The target vesting outcomes will remain at 150% of salary, with the maximum set at 300%. The first LTIP awards will be granted in 2024.
What’s the view of voting agencies? Glass Lewis has no major concerns about the new remuneration policy and also recommends shareholders support the advisory vote on the annual remuneration report.
How did last year’s AGM go? The annual remuneration report received 96.07% of votes in favour.
How’s the company doing on diversity? At the end of 2022, women held five of the 11 boardroom posts and accounted for 46.7% of positions on the executive committee. The company meets the Parker Review recommendation to have at least one member of the board from an ethnic minority background. It has a target for 15% black, Asian and minority ethnic representation in senior roles by 2025, compared with 10.2% at the end of last year.
When: 10am, Tuesday 23 May.
Where: ExCel London, 1 Western Gateway, Royal Victoria Dock, London, E16 1XL.
How to participate: Shareholders will be able to virtually attend via the Lumi electronic meeting platform. Voting instructions sent in advance must reach the company’s registrar no later than 10am, Friday 19 May. More AGM details can be found here.
Who’s in the chair? Andrew Mackenzie, who was chief executive of mining giant BHP from 2103 to 2019 and was appointed in May 2021.
How did the company do in 2022? Adjusted earnings more than doubled on a year earlier to a new record of $40 billion (£32 billion). Shell noted that this was $17 billion higher than 2014, when the Brent price was at a similar level. As well as favourable trading conditions, it highlighted disciplined operational delivery and its ongoing work to create a “resilient and profitable portfolio”. The company generated more than $68 billion (£54.4 billion) of cash flow from operations and made almost $26 billion (£20.8 billion) of distributions through dividends and buybacks. This included an increased fourth quarter payment of 0.2875 cents (24.11p) on 27 March, which resulted in an increase for the year of 16% to $1.0375.
How have shares performed? Up 40% to 2,326p (2,345.5p on Thursday).
How much is the boss paid? Wael Sawan was appointed as chief executive on 1 January on a salary of £1.4 million. No increases are anticipated during 2023. He is eligible for a target annual bonus of 125% of salary and has received 300% of salary under the 2023 long-term incentive plan.
And the former boss? Ben van Beurden’s single figure outcome came to £9.7 million, an increase of 53% from 2021 and his highest since he got £17.8 million in 2018. As well as his base salary of £1.42 million, van Beurden got £2.59 million in cash and deferred shares after the annual bonus scheme awarded 73% of the maximum opportunity. The 41% vesting of long-term incentives granted in 2020 contributed £4.9 million to the final total. The bulk of this came from Shell’s strong three-year performance in free cash flow, whereas total shareholder return of 14.3% ranked fourth against other energy majors and meant zero vesting on this measure. For 2023, he is due to receive a loss of office payment of one year’s annual pay (base salary plus target bonus), in line with Dutch statutory end-of-employment compensation.
Was downward discretion used? Two contractors in Shell-operated ventures died during the year. The remuneration committee reviewed the fatalities in Nigeria and Pakistan and the company’s overall safety performance in 2022 and decided not to use any discretion in determining the final bonus outcome for executive directors. On the long-term incentive plan, no targets were adjusted as a result of the Covid-19 or any other reason. The remuneration committee was also satisfied that no windfall gains had arisen.
What’s in the new remuneration policy? The remuneration committee says the existing policy is robust and well aligned with best governance practice. However, it is proposing a small number of changes, including to support the delivery of its Powering Progress strategy.
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How did last year’s AGM go? The annual remuneration report was approved with 95.92% of votes in favour. The last binding vote on the remuneration policy took place in 2020 and received 92.91% of votes in favour.
What’s the view of voting agencies? Glass Lewis said shareholders may reasonably question the appropriateness of a full payout under the safety component of the annual bonus given the two fatalities connected to the company's operations. The agency said a discretionary reduction to awards may have been appropriate. However, in light of significant year-on-year progress in overall safety performance and the company's comprehensive disclosure, it does not believe that shareholder action is necessarily warranted. It recommends support for the annual remuneration report as well as the binding vote on the new remuneration policy.
Is there a climate-related vote? At last year’s AGM, 80% of Shell’s shareholders voted in support of the progress made during 2021 implementing the company’s energy transition strategy. Shell has published a further report on its work in 2022 to become a net-zero emissions business by 2050, with this being subject to an advisory vote at this year’s AGM. Another resolution, proposed by Follow This, is considered by Shell to be against shareholders’ financial interests and would not help to mitigate global warming.
How’s the company doing on diversity? Following the 2023 AGM, female board representation will be 42%, and the company will have three directors from an ethnic minority background. Female representation in the company’s top 1,250 roles has strengthened during 2022 to 30.4% as Shell strives to deliver on its aim of achieving 35% female senior leadership representation by 2025.
Legal & General
When: 11am, Thursday 18 May.
Where: British Medical Association, BMA House, Tavistock Square, Bloomsbury, London, WC1H 9JZ.
How to participate: There will be facilities for shareholders to join and vote electronically. Proxy votes must be received no later than 11am, Tuesday 16 May. More AGM details can be found here.
Who’s in the chair? John Kingman, who was appointed in October 2016, played a leading role in the Treasury’s response to the financial crisis after handling the resolution of Northern Rock and leading negotiations with RBS, Lloyds and HBOS on their £37 billion recapitalisation.
How did the company do in 2022? Operating profit of £2.5 billion rose 12%, with three of the company’s four divisions posting growth. Earnings per share of 38.33p also rose by 12% while cash generation of £1.9 billion was 14% higher. A final dividend of 13.93p a share is due to be paid on 5 June, meaning the total for 2022 increased by 5% to 19.37p.
How have shares performed? Down 17% to 249.5p (224.1p on Thursday).
How much is the boss paid? The base salary for Nigel Wilson has increased for 2023 by 4.5% to £1.07 million. His total remuneration for 2022 came to £3.96 million, which included £1.41 million in cash and deferred shares after the annual bonus scheme paid 91.4% of the maximum. The 52.3% vesting of long-term incentives granted in 2020 contributed £1.35 million. This outcome was chiefly due to earnings per share growth over the three year period, whereas total shareholder return against L&G’s comparator group vested at zero.
What about his leaving arrangements? Chief executive since 2012, Wilson announced in January his intention to retire. He joined L&G as chief financial officer in 2009, when shares were 20p during the financial crisis. Wilson has agreed to stay until his successor is in place, during which time he will be paid in line with the directors’ remuneration policy. This will include participation in the 2023 bonus and long-term incentive plans, with the remuneration committee not due to consider his departure terms until a retirement date has been set.
What’s in the new remuneration policy? The pay committee considered a number of alternative approaches, but concluded that the current policy is aligned with the delivery of business strategy and shareholder experience. As a result, the new policy is very similar to the existing one with no new incentive plans or other significant changes.
How did last year’s AGM go? The annual remuneration report was approved with 95.39% of votes in favour.
What’s the view of voting agencies? Glass Lewis recommends shareholders support the annual remuneration report and the binding vote on the new three-year remuneration policy.
Is there a climate-related vote? The AGM provides an opportunity for shareholders to discuss and provide feedback on the company’s Climate Transition Plan. The outcome of the vote is not binding but the board will take it, and discussions at the AGM, into account in determining how the company progresses, evaluates and looks to improve upon the initiatives set out in the plan.
How’s the company doing on diversity? The board comprised 42% women at the end of 2022, with 50% of the company’s businesses now led by a female CEO. A quarter of the board is of minority ethnicity.
When: 11.30am, Wednesday 17 May.
Where: The Grand Hotel. High Gosforth Park, Newcastle upon Tyne, NE3 5HN.
How to participate: Questions sent to Greggsquestions@greggs.co.uk by 5pm, Friday 12 May will be answered on the day or receive a written reply. Proxy voting instructions must be lodged by 11.30am, Monday 15 May. More AGM details can be found here.
Who’s in the chair? Matt Davies, the former chief executive of Tesco UK and Ireland, Pets at Home and Halfords, is hosting his first AGM in the role.
How did the company do in 2022? Total sales rose 23% to £1.51 billion, with like-for-like sales in managed shops ahead 17.8%. Pre-tax profits lifted 1.9% to £148.3 million and diluted earnings per share rose to 117.5p from 114.3p the year before. A final dividend of 44p a share is due to be paid on 26 May, meaning a 2p improvement in total ordinary dividend to 59p.
How have shares performed? Down 30% to 2,346p (2,856p on Thursday).
How much is the boss paid? Roisin Currie, who was appointed chief executive in May 2022, received a 4% increase in her base salary for this year to £624,000. Her total remuneration for 2022 came to £1.21 million after the annual bonus scheme paid £440,832 based on 75.4% of the maximum opportunity. The 75% vesting of long-term incentives granted in 2020 contributed £247,206. Former boss Roger Whiteside got £556,057 under the scheme, taking his total remuneration in the year to just over £1 million.
What’s in the new remuneration policy? The annual bonus limit is being extended to 150% of salary for executive directors, although for 2023 the opportunity will remain unchanged from the prior year at 125% of salary. For long-term incentives, the remuneration committee plans to increase the policy limit from 150% to 200% of salary for the chief executive and from 125% to 175% for other executive directors. It adds that Greggs is currently below market in terms of the incentive opportunities offered to its executive directors, which is why the new policy includes flexibility for an increase without the need to seek approval through a new policy. The report said: “We have no current intention to increase award levels above those agreed for 2023, and in particular we recognise the potential concerns about making such a change against the current economic backdrop.” The new policy continues to ensure a significant proportion of pay is delivered in shares.
How did last year’s AGM go? The annual remuneration report was approved with 85.65% of votes in favour.
What’s the view of voting agencies? Glass Lewis recommends shareholders support the annual remuneration report and the binding vote on the new three-year remuneration policy.
How’s the company doing on diversity? Women account for five of the eight board roles and make up almost half the management population. Overall, 67% of the total workforce is female. The company meets the Parker Review recommendation to have at least one member of the board from an ethnic minority background.
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