Interactive Investor

Time to kick out these FTSE 100 and FTSE 250 directors?

4th November 2022 10:05

Graeme Evans from interactive investor

They’ve already been in their roles for longer than is recommended, and shareholders now have a chance to let them know whether they’ve outstayed their welcome. 

Two non-executive directors whose board tenures exceed the recommended nine years are standing for re-election at the AGMs of Smiths Group (LSE:SMIN) and JD Wetherspoon (LSE:JDW).

The pubs chain, which has previously seen more than 20% of shareholder votes fail to support its longest-serving directors, argues that it benefits from their experience.

In the case of Smiths Group, chair Sir George Buckley is staying during a period of change for the conglomerate following the appointment of a new chief executive. 

Smiths Group

When: 11am, Wednesday 16 November.

Where: Freshfields Bruckhaus Deringer, 100 Bishopsgate, London, EC2P 2SR.

How to participate: A webcast of the meeting will be available on the company’s website, but shareholders will not be able to vote or ask questions remotely. Proxy voting instructions must be received by 11am, Monday 14 November. More AGM details can be found here.

Who’s in the chair? Sir George Buckley, the former 3M chief executive, was appointed in August 2013. His tenure exceeds the recommended nine years, but he has been asked by the board to stay on following the appointment of a new chief executive.  

How did the company do in the year to 31 July? Organic revenue growth of 3.8% was the fastest by the engineering conglomerate in nearly a decade, leading to overall growth in sales of 6.7% to £2.6 billion and operating profit 12% higher at £417 million. Basic earnings per share was 17.8% higher at 69.8p. The final dividend of 27.3p a share is due to be paid on 18 November, resulting in a 5% increase in the total for the year at 39.6p.

How have shares performed? Down 2% to 1,542.5p (1,563.5p on Thursday).

How much is the boss paid? Paul Keel’s pay for 2022/23 has increased by 2.5% to £896.875. For the previous financial year, his total remuneration came to £1.8 million after the annual bonus scheme paid £678,000 in cash and shares, based on 38.8% of the maximum opportunity. The rest of the total was related to pension contributions equivalent to 12% of base salary, as well as relocation and other benefits.

How did last year’s AGM go? The annual remuneration report was backed with 95.86% of votes in favour, with 86.69% in favour of the new three-year remuneration policy.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the remuneration report. It backs the re-election of Sir George as chairman but warns it expects to see progress on succession plans by next year’s AGM.

How’s the company doing on diversity? The board has 45% female representation. Women make up 28% of total employees and 24% of senior leaders. It meets the Parker Review recommendation for FTSE 100 companies to have one director of ethnic diversity.

JD Wetherspoon

When: 10am, Thursday 17 November.

Where: etc.venues, 50-52 Chancery Lane, London , WC2A 1HL.

How to participate: Proxy voting forms need to be returned no later than 10am, Tuesday 15 November. The same deadline applies to questions in advance of the meeting, which should be sent to AGM2022@jdwetherspoon.co.uk. More AGM details can be found here

Who’s in the chair? Tim Martin, who founded the pubs business in 1979.

How did the company do in the year to 31 July? Revenues of £1.7 billion were 4% lower than the year before the pandemic and losses before exceptional items amounted to £30.4 million, compared with a profit of £120.5 million in 2019.  Earnings before one-offs came to 15.2p a share, a fall of 78% on three years ago. There was no dividend.

How have shares performed? Down 51% to 556.5p (456.4p on Thursday).

How much is the boss paid? Long-time chief executive John Hutson’s salary has remained at £638,000, with the award of long-term incentive shares worth £223,000 taking his total remuneration to just over £1 million. Martin’s salary as executive chairman was £324,000.

How did last year’s AGM go? The annual remuneration was approved with 92.36% of votes in favour. Resolutions at last year’s AGM seeking the re-election of Sir Richard Beckett and Debra van Gene received less than 80% of the total votes cast. The company believes it benefits from the experience of directors who have served more than nine years and does not agree that it impacts the individual’s independence.

What’s the view of voting agencies? Sir Richard is stepping down from the board at this year’s AGM, but Glass Lewis remains unhappy with the reappointment of van Gene as she is not considered independent after serving more than nine years.

How’s the company doing on diversity? There are two female directors on the nine-strong board. The company has not disclosed progress in meeting the Parker Review, which recommends that FTSE 250 firms have one director from an ethnic minority background by the end of 2024. Glass Lewis has indicated it will recommend voting against the chair of the nomination committee should there be no change on diversity by the 2023 AGM.

Genus

When: 11am, Wednesday 23 November.

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

How to participate: Questions relating to the AGM sent before 14 November to Global-GenusCoSec@genusplc.com will be answered on the company’s website prior to the meeting. Proxy voting instructions need to be returned no later than 11am, Monday 21 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 3% to £593.4 million. Amid a 50% fall in average pig prices in China, adjusted profits declined 16% to £71.5 million and earnings per share by 18% to 82.7p. A final dividend of 21.7p a share is due to be paid on 9 December, leaving the total for the year unchanged at 32p.

How have shares performed? Down 50% to 2,508p (2,668p on Thursday).

How much is the boss paid? Stephen Wilson’s salary is unchanged for the current financial year at £616,900. His total remuneration for 2021/22 came to £1.3 million, which included an annual bonus of cash and deferred shares worth £192,000. This was 18% of the maximum opportunity after targets on profits and cash flow were missed and the company used discretion to reduce the outturn from 25% in recognition of the shareholder experience. The previous year’s bonus was £998,000. Long-term incentives make up the rest of Wilson’s total remuneration after the vesting of 41.4% of the maximum opportunity generated £446,250.

What’s changing in the new remuneration policy? The limit available for exceptional awards under the long-term incentive plan is to increase to 400% of salary from 300% currently. Genus (LSE:GNS) said this reflected the fact that it operates across multiple global markets, including locations where typical reward structures differ in terms of quantum or operation. This is particularly evident in the US. It said: “While we recognise that we are a UK-listed organisation, we believe it is important that we are able to attract talent from across the world.”

What’s the view of voting agencies? Glass Lewis recommends support for the annual remuneration report and the binding vote on the three-year remuneration policy.

How did last year’s AGM go? The annual remuneration report was backed with 96.9% of votes in favour.

How’s the company doing on diversity? At the year-end, three of the seven directors were female. It is supportive of the Parker Review target to have at least one board member from a minority ethnic background.

McBride

When: 2pm, Wednesday 16 November.

Where: Building C, Central Park, Northampton Road, Manchester M40 5BP.

How to participate: Proxy voting instructions must be received by no later than 2pm, Monday 14 November to be valid. More AGM details can be found here.

Who’s in the chair? Jeff Nodland, who was appointed in 2019, has 11 years experience in consumer chemicals manufacturing businesses, most recently as CEO of KIK Custom Products.

How did the company do in the year to 30 June? The supplier of household products reported unchanged revenues of £678.3 million, improving to 2.9% higher on a constant currency basis. A year of significant cost inflation, primarily in raw materials but also supply chain and logistics costs, meant a bottom-line loss of £29.6 million compared with a profit of £19.9 million the year before. The loss per share from continuing operations was 13.8p, against the previous earnings per share of 7.8p. There was no dividend.

How have shares performed? Down 83% to 15.5p (23.95p on Thursday).

How much is the boss paid? Chris Smith’s salary in 2022-23 is unchanged for the second successive year at £439,350. No bonus was paid and the long-term incentives granted in September 2019 lapsed, meaning total remuneration for the most recent financial year amounted to £551,000 when including pension and other benefits. Long-term incentives for 2022-23 have been granted at 35p a share and will use targets based on the ratio of net debt to earnings to ensure McBride (LSE:MCB) focuses on maintaining a healthy cash flow.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How did last year’s AGM go? The annual remuneration report was approved with 98.43% of votes in favour.

How’s the company doing on diversity? The eight-strong board had two female directors at the end of June. It has pledged to ensure as far as possible that there is one member of the board from a minority ethnic background.

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