Worries about excessive payouts resurface at this billion-pound business

A £20 million cap on variable pay for the top two directors at Ashmore Group (LSE:ASHM) has the potential to cause controversy when the emerging markets fund manager holds its AGM.

Voting advisory group Glass Lewis is concerned that the proposed inclusion of the cap in Ashmore’s new three-year remuneration policy will allow for excessive payouts.

• Invest with ii: Top UK Shares | Free Regular Investing | Open an investment Account

Ashmore said it wants to provide additional certainty to shareholders and maintain flexibility to operate a fully variable pay approach. It added: “The cap is set at a level to provide headroom to reward performance in years of considerable financial growth.”

Ashmore’s annual report reveals the highest aggregate pay figure for the CEO and finance director amounted to £12 million in 2021. The company’s arrangements are performance and equity driven, with executive base salaries currently capped at £120,000.

Barratt Developments

When: 12 noon, Wednesday 18 October.

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

How to participate: A live webcast is available, but the facility does not include the right to speak or vote on the business of the Barratt Developments (LSE:BDEV) AGM. Questions can be submitted during the webcast or in advance through agmquestions@barrattplc.co.uk before 5pm, Wednesday 11 October. The deadline for proxy voting instructions is no later than 12 noon, Monday 16 October. More AGM details can be found here.

Who’s in the chair? Caroline Silver, who has held senior corporate finance and M&A positions at Morgan Stanley and Merrill Lynch, is hosting her first Barratt AGM.

How did the company do in the year to 30 June? Revenues rose 1% to £5.3 billion following a 3.9% decline in the number of home completions to 17,206. Adjusted profits fell 16.2% to £884.3 million and earnings per share by 18.9% to 67.3p. A final dividend of 23.5p is due to be paid on 3 November, resulting in an 8.7% decline in the total for the year at 33.7p.

How have shares performed? Down 8% at 413.5p (432.7p on Thursday)

How much is the boss paid? David Thomas received a 4% pay rise in July, taking his base salary to £836,000. His total remuneration for 2022/23 amounted to £1.76 million, including an annual bonus of £483,000. This was based on 40.1% of the maximum opportunity after adjusted profits came in short of the £1.015 billion threshold. The 19.6% vesting of long-term incentives granted in 2020 contributed £300,000 to the overall figure.

What’s in the new remuneration policy? The remuneration committee is proposing minor changes to the document last approved in 2020 with 98.38% of votes in favour.  These include a mandatory deferral of at least one third of any bonus earned.

How did last year’s AGM go? The annual remuneration report was approved with 93.72% of votes in favour. More than 20% of votes were cast against the re-election of former chair John Allan, reflecting concern about a fall in the level of female representation on the board.  

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

How’s the company doing on diversity? Barratt’s board meets the requirements to have one woman in a senior position and at least one member from a minority ethnic background. Female director representation reached 40% in June but has since dropped to 33.3%. Barratt said it is committed to having at least 40% female representation by the end of 2025.

Ashmore

When: 12 noon, Wednesday 18 October.

Where: De Vere Grand Connaught Rooms, 61-65 Great Queen St, London WC2B 5DA.

How to participate: The deadline for the return of proxy voting instructions is 12 noon, Monday 16 October. More AGM details can be found at the bottom of this page.

Who’s in the chair? Clive Adamson, who joined the board in 2015, took on the role in April 2022. His 40 years in financial services include executive positions in banking and regulation.

How did the company do in the year to 30 June? Assets under management declined by 13% over the year to $55.9 billion (£45.8 billion), reflecting net outflows of $11.5 billion (£9.4 billion) offset by a positive investment performance of $3.4 billion (£2.8 billion). Revenues fell 25% to £196.4 million and pre-tax profits dropped 6% to £111.8 million, with earnings per share off 7% at 12.4p. The final dividend for payment on 8 December has been maintained at 12.1p a share, giving a total for the year of 16.9p.

How have shares performed? Down 5% at 208p (186.9p on Thursday).

How much is the boss paid? Mark Coombs, who founded the business which became Ashmore      in 1992, continues to receive a basic salary of £100,000. Despite an improved investment performance, he waived his bonus award in light of the financial results. The bonus for finance director Tom Shippey was £720,000, with 70% of the award delivered in restricted shares. Shares awarded to the executive directors in 2017 lapsed in full after performance conditions were not met, while 17% of the awards made in 2018 are due to vest in the current financial year.

What’s in the new remuneration policy? Ashmore’s remuneration policy, which was last approved with 69.16% of votes in favour, will continue to deliver a high percentage of the variable remuneration in equity. Key changes include the replacement of the current matching share plan with a separate bonus and long-term incentive plan. At least 70% of the annual bonus will be subject to deferral into Ashmore shares vesting in five years, significantly above market practice. The base salary cap for executive directors is increasing to £150,000, having been at £120,000 since 2015.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote against the new three-year remuneration policy. It welcomes the simplified variable incentive structure but is concerned by the potential for excessive payouts following the introduction of an aggregate variable remuneration cap for the two executive directors of £20 million. The agency recommends shareholders support the annual remuneration report.

What’s the company say about the cap? It believes the level of the cap provides headroom to reward performance in years of considerable financial growth. The company adds that it has always placed considerable focus on variable remuneration being aligned with company performance. It says it is prepared to reduce remuneration levels when there are periods of diminished business performance and increase them when it is justified in doing so.

How did last year’s AGM go? The annual remuneration report was approved with 78.02% of votes in favour.

How’s the company doing on diversity? The board’s gender split is 57% female, including the senior independent director. It also meets the requirements of the Parker Review on ethnic diversity. Ashmore is targeting 40% of women on the senior management team, up from 17% currently, and 40% ethnic minority representation by 2027.