Shareholders told not to vote for this FTSE 250 pay award

Pay arrangements for the new boss of Genus (LSE:GNS) are under scrutiny after the FTSE 250-listed firm had to bridge the gap between American and UK-style approaches to remuneration.

US-based Jorgen Kokke, who joined the animal genetics firm from New York-listed Ingredion, has received an exceptional award of Genus shares worth 400% of his $825,000 salary.

These will be subject to three-year performance conditions, unlike the guaranteed bonus of $412,500 he received in September in place of one forfeited at his previous employer.

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Voting agency Glass Lewis is troubled by the arrangements and has recommended shareholders vote against the annual remuneration report at the forthcoming Genus AGM.

In making Kokke’s appointment, the company said that it operated fully within the remuneration policy approved by 93% of shareholders in November 2022.

It added: “We focused on how we could transition Jorgen successfully onto our reward structure, while recognising that the composition and quantum of reward available within the US market does differ from that typically seen within the UK FTSE 250 landscape.”

PZ Cussons 

When: 10.30am, Thursday 23 November.

Where: Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG.

How to participate: Proxy voting instructions for PZ Cussons AGM should be returned no later than 10.30am, Tuesday 21 November. More AGM details can be found here.

Who’s in the chair? David Tyler, whose executive career was spent at Unilever, NatWest, Christie’s and GUS, joined the board in 2022 and became chair in March.

How did the company do in the year to 31 May? The Carex and Imperial Leather consumer goods business recorded its third consecutive year of like-for-like sales growth, leading to a 10.7% rise in revenues to £656.3 million. Pre-tax profits lifted 12.6% to £74.1 million but earnings per share fell 10.7% to 11.23p. An unchanged final dividend of 3.73p a share is due to be paid on 30 November, resulting in a total for the year of 6.40p.

How have shares performed? Down 9% at 184p (135.2p on Thursday).

How much is the boss paid? The base salary of chief executive Jonathan Myers increased in September by 4.4% to £640,000.  His total remuneration for the year amounted to £1.57 million, the highest for the chief executive’s role since the award of £1.58 million in 2016-17. The figure for Myers included an annual bonus of £736,331 based on 80.1% of the maximum bonus opportunity while the 20% vesting of long-term shares contributed £142,763.

Why the larger pay rise for the chief financial officer? Sarah Pollard was appointed in 2021 on a salary materially lower than that paid to her predecessor. The remuneration committee believes an 8.1% rise to £400,000 positions the CFO role more competitively.

What’s in the new remuneration policy? The company is simplifying its approach to long-term pay by adopting a restricted share plan (RSP). This removes the need to set and assess targets every year, which the remuneration committee says can be a complex and challenging process especially during a period of transformation. The current expectation when moving from a performance share plan (PSP) is a 50% reduction in the maximum opportunity.

However, in order to maintain an equal balance of short and long-term rewards it is proposing the RSP is a maximum of 90% of salary for the CEO compared with 150% currently. The proposed new policy also includes an increased 40% deferral of the annual bonus into shares for a period of two years, while non-executive directors will be encouraged to build up 100% of one year’s net fee within four years of appointment. 

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How did last year’s AGM go? The annual remuneration report was approved with 92.82% of votes in favour.

What’s the view of voting agencies? Glass Lewis recommends shareholders support the annual remuneration report but oppose the binding resolution on the new remuneration policy. The agency believes the company has not given a sufficiently compelling rationale for the introduction of an RSP in place of a traditional long-term incentive framework that utilises an objective, formula-based approach in determining vesting levels. It also notes that RSPs are uncommon among the company's peers, the majority of which operate standard long-term incentive plans (LTIPs). Other concerns included the failure to implement a 50% discount relative to the normal maximum opportunity under the previous LTIP.

How’s the company doing on diversity? The company meets the target of the Parker Review by having at least one director from a minority ethnic background. One senior position is held by a woman, but the recent departure of chair Caroline Silver means the board is slightly below the 40% target for female representation.

Genus

When: 11am, Wednesday 22 November.

Where: Buchanan Communications, 107 Cheapside, London EC2V 6DN.

How to participate: Proxy voting instructions need to be returned no later than 11am, Monday 20 November. More AGM details can be found here.

Who’s in the chair? Former Tate & Lyle chief executive Iain Ferguson was appointed in July 2020.

How did the company do in the year to 30 June? The animal genetics company, which supplies most of the world’s top 100 pig and dairy farmers, lifted revenues by 16% to £689.7 million. Adjusted profits were flat at £71.5 million and earnings per share rose 3% to 84.8p. The full-year dividend has been maintained at 32p a share, which includes the 21.7p a share scheduled for payment on 8 December.

How have shares performed? Down 11% at 2,166p (2,158p on Thursday).

How much is the boss paid?  Stephen Wilson, who left the business on 30 September, got a total of £1.2 million in his final full year as chief executive. This included £244,524 after the annual bonus scheme paid 23% of the maximum opportunity and £285,896 from the 36% vesting of long-term performance shares. He joined the company in 2013 as chief finance officer before his appointment as chief executive in 2019.

And the pay of the new boss?  Jorgen Kokke, who will initially be based in the United States, has been recruited on an annual salary of $825,000 (£672.500). The buyout of legacy awards from former employer Ingredion are $4.5 million (£3.7 million), with these converted into Genus shares with similar vesting timelines. A guaranteed bonus payable in cash of $412,500 (£336,272) recognised the forfeiting of an annual bonus at his previous employer.

An exceptional award under the performance share plan (PSP) of 400% of salary was granted in September with vesting based on Genus performance in 2023-26. There’s an ongoing opportunity of 200% of salary for the annual bonus and 200% of salary for PSP awards.

What’s the company said about the arrangements? Genus operates across multiple global markets, with the remuneration committee highlighting the growing differences between remuneration structures for senior leadership in the US compared to the UK. In particular this focuses on the quantum available under variable plans and the range of incentive vehicles utilised within typical US-based organisations.

What’s the view of voting agencies? Glass Lewis is troubled by the guaranteed bonus paid to the newly appointed CEO in September, given that it was awarded in place of a bonus from his former employer that would have been subject to performance conditions. The agency adds: “Our concerns in this regard are exacerbated by the already significant buy-out awards and exceptional LTIP grant received by the CEO.” It recommends shareholders vote against the annual remuneration report.

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How did last year’s AGM go? The annual remuneration report was approved with 98.23% of votes in favour, while the binding resolution on the new three-year remuneration policy got 93.10% support.

How’s the company doing on diversity? The company exceeds the FCA target of 40% female board representation and has two women in senior roles. There is one director from a minority ethnic background