Will this £750,000 salary cause another storm?

The £750,000 salary of a construction industry boss triggered a big protest at this company’s AGM last year. Has it done enough to placate shareholders?

A controversial 26% pay rise for the boss of Kier Group (LSE:KIE) means there will be increased scrutiny on the infrastructure firm when it holds its AGM next month.

Shareholders representing more than 20% of votes failed to back last year’s remuneration report, having been unhappy at the one-off hike in salary for Andrew Davies to £750,000.

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Kier’s response to the dissent, which included no pay rise for Davies this year and adjustments to future long-term incentive scheme grants, means advisory firm Glass Lewis has recommended shareholders vote in favour of the pay report at this year’s AGM.

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Redrow

When: 10am, Friday 11 November.

Where: Village Hotel Chester St. David’s, St. David’s Park, Ewloe, Deeside CH5 3YB.

How to participate: Proxy voting instructions must be returned by 10am on Wednesday 9 November. Questions in advance of the meeting should be submitted to agm@redrow.co.uk no later than 10am on Friday 4 November. More AGM details can be found here.

Who’s in the chair? Former Land Securities director Richard Akers joined the board in June 2021.

How did the company do in the year to 3 July? Revenues increased by 10% to £2.14 billion, returning to pre-Covid record levels after the number of legal completions rose 2% to 5,715. Underlying profits lifted 31% to £410 million and earnings per share by 30% to 96p. The final dividend of 22p has been increased by 19% and will be paid on 16 November.

How have shares performed? Down 22% to 491.6p (426.4p on Thursday).

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How much is the boss paid? Matthew Pratt has received a 5% rise in line with the rest of the workforce, taking his salary for 2022/23 to £656,300. His single figure remuneration for the past financial year came to £1.61 million, which included £781,000 in cash and shares from an annual bonus scheme that paid 100% of the maximum opportunity. The vesting of 24% of long-term shares awarded in 2019 accounted for £130,000 of the total figure.

What’s the view of voting agencies? Glass Lewis is in favour of the annual remuneration report, but notes that 2022-23 long-term incentives have been granted at a share price level 44% below the previous year’s. It is also 20% below awards granted in 2017, 2018 and 2019 but Redrow (LSE:RDW)’s remuneration committee believes this is not sufficiently material for an adjustment to be made. Its annual report highlights the scheme’s nil and modest vesting over the last three years and that Redrow’s policy to grant 150% of salary compares favourably against other housebuilders and similar FTSE 250 companies.

How did last year’s AGM go? The annual remuneration report was approved with 96.94% of votes in favour.

How’s the company doing on diversity? The current female representation on the board is 33%, in line with the FTSE Women Leaders review target. There are currently no directors from a minority ethnic group.

Galliford Try

When: 11.30am, Friday 11 November.

Where: Peel Hunt, 7th floor, 100 Liverpool Street, London, EC2M 2AT.

How to participate: Proxy voting instructions are required by 11.30am, Wednesday 9 November. Galliford Try (LSE:GFRD) has pledged to respond to questions received in advance by publishing responses on its website prior to the meeting taking place.  More AGM details can be found here.

Who’s in the chair? Alison Wood, who joined the board in April, is the former group strategic director at BAE Systems.

How did the company do in the year to 30 June? Revenues rose 10% to £1.24 billion, reflecting growth in Infrastructure and an unchanged performance in its Building division. Pre-tax profits lifted 68% to £19.1 million after margins improved to 2.4% in both divisions, leading to a rise in earnings per share from 9.5p to 16p.  The final dividend of 5.8p is due for payment on 9 December and means the total for the financial year has risen 70% to 8p.

How have shares performed? Up 21% to 170p (164.4p on Thursday).

How much is the boss paid? Bill Hocking’s salary is £475,000 after receiving a 3.5% rise in April that came in below the average for the workforce. Hocking’s total remuneration for 2021-22 was £1.96 million, including cash and shares worth £551,000 after the annual bonus scheme paid 100% of the maximum opportunity. The final figure also included  £904,000 worth of shares due to vest under the long-term incentive scheme, representing 89% of the maximum award. The company also revealed in its annual report that a one-off cost of living payment worth a total of £1 million has recently been made to over 1,800 staff. 

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 99.89% of votes in favour.

How’s the company doing on diversity? The gender split of the eight-strong board is 50%. The company supports the recommendations of the Parker Review and has pledged that ethnic diversity is considered in future recruitment to the board.

Kier

When: 9.30am, Thursday 17 November.

Where: Linklaters, One Silk Street, London, EC2Y 8HQ.

How to participate: Proxy voting instructions need to be returned by 9.30am, Tuesday 15 November. Questions submitted beforehand via email to cosec@kier.co.uk will be addressed at the meeting or via the company’s website. More AGM details can be found here.

Who’s in the chair? Matthew Lester, the finance director of Royal Mail from 2010 to 2017, was appointed in January 2020.

How did the company do in the year to 30 June? The infrastructure services group reported broadly unchanged revenues of £3.3 billion, which reflected the anticipated reduction in volumes in its construction division. Adjusted operating profit of £121 million was 20% higher after stronger performances in all three of its divisions led to a rise in profit margin of 70 basis points to 3.7%. Adjusted earnings per share were 16.8p, down from 25p last time due to dilution from the 2021 equity raise. The group's focus on cash generation and reducing net debt means dividend payments are currently suspended.

How have shares performed? Down 48% to 67.9p (62.2p on  Thursday).

How much is the boss paid? Andrew Davies gets a basic salary of £750,000, which is unchanged for this year as part of commitments made following 2021’s 26% increase from £595,000. For the 2021-22 financial year, his annual bonus in cash and shares amounted to £739,000 based on 78.8% of the maximum opportunity. This week’s vesting of 75% of the long-term incentive awards granted in 2019 are worth £684,742 and took his total remuneration for the year to £2.24 million. In line with the average workforce increase of 4%, chief financial officer Simon Kesterton now receives a basic salary of £524,035.   

How did last year’s AGM go? The directors’ remuneration report received the support of 73.93% of votes cast. The company said the dissent was primarily related to the chief executive’s base salary increase and 2021’s long-term incentive plan award values of 200% of base salary for Davies and Kesterton.

How has the company responded? The remuneration committee has reiterated that there will be no increase in the chief executive’s base salary for the current financial year and that long-term incentive plan awards in 2023 and 2024 will be 175% of base salary. As previously disclosed, Davies agreed to increase the deferral element of his 2022 bonus from 33% to 50%. A new remuneration policy is due to be put before shareholders at next year’s AGM.

What’s the view of voting agencies? Glass Lewis believes shareholders can be satisfied with the company’s response to the dissent and has recommended they vote in favour of this year’s remuneration report.

How’s the company doing on diversity? The board is 38% female after September’s appointment of Chris Browne as a non-executive director.