Three FTSE 100 companies will try to convince shareholders to back pay schemes and other initiatives, but will they succeed? Graeme Evans assesses the odds.
The remuneration of Centrica chief executive Chris O’Shea totalled £4.5 million, a figure that included a bonus of £1.4 million as well as £2.2 million from the vesting of long-term incentives. He got a total of £875,000 the previous year after giving up his bonus.
Tesco boss Ken Murphy got £4.4 million, which included a bonus of cash and deferred shares worth £2.7 million. Votes on both remuneration reports take place in the middle of June.
When: 11.30am, Friday 16 June.
Where: Heart building, Shire Park, Welwyn Garden City, Herts, AL7 1TW.
How to participate: A webcast is available but shareholders won’t be able to use this to vote or ask questions. Proxy voting instructions must be lodged no later than 11.30am, Wednesday 14 June, with the same deadline for questions. More AGM details can be found here.
Who’s in the chair? Byron Grote is hosting the meeting in place of John Allan, whose eight years as chair have come to an earlier-than-expected end after Tesco said that allegations relating to his conduct risked becoming a distraction to the group. Grote is the senior independent director and served on the board of BP from 2000 to 2013.
How did the company do in the year to 25 February? Sales excluding VAT and fuel rose 5.3% to £57.7 billion but adjusted operating profit fell 6.9% to £2.6 billion, partly due to investment in the customer offer and significant operating cost inflation. A non-cash impairment charge meant the bottom-line profit fell 51% to £1 billion. Adjusted earnings per share and the total dividend were unchanged at 21.85p and 10.90p a share respectively, with shareholders due to receive a final dividend of 7.05p a share on 23 June.
How have shares performed? Down 13% to 246.9p (265p on Thursday).
How much is the boss paid? Ken Murphy’s base salary is due to increase on Thursday by 3% to £1.42 million. His total remuneration for 2022/23 amounted to £4.4 million, compared with £4.7 million the previous financial year and the £6.3 million picked up by predecessor Dave Lewis. The final figure for Murphy included cash and deferred shares worth £2.73 million after the annual bonus scheme paid 79% of the maximum opportunity, based on the benchmarks of adjusted operating profit, sales and individual performance. There was no vesting of long-term incentives as Murphy was not in the role for the 2020 grant.
How did last year’s AGM go? The annual remuneration report was backed with 92.22% of votes, while the binding resolution on the new three-year remuneration policy got 91.98%.
What's the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.
How’s the company doing on diversity? Women held 42% of boardroom roles at the end of 2022, with two directors meaning that 17% of the board is ethnically diverse.
When: 10.30am, Tuesday 13 June.
Where: Leeds Marriott Hotel, 4 Trevelyan Square, Boar Lane, Leeds, LS1 6ET.
How to participate: For the second year running, shareholders have the option to join the meeting via a live webcast. Last year’s AGM was held in Leicester, with this year’s choice of Leeds due to the local connection through British Gas Energy and British Gas Services & Solutions. Questions in advance of the meeting should be submitted through the website address centrica.com/agm23 no later than 5pm on Tuesday 6 June and proxy voting instructions by 10.30am Friday, 9 June. More AGM details can be found here.
Who’s in the chair? Scott Wheway, the former chief executive of Best Buy Europe and MD of Boots the Chemist, was appointed in March 2020. He joined the Centrica board in 2016.
How did the company do in 2022? Adjusted earnings per share jumped to 34.9p from 4.1p, aided by strong gas production and electricity generation against a backdrop of higher commodity prices. Lower retail adjusted operating profit included a small loss in British Gas Services & Solutions. The statutory loss per share was 13.3p, reflecting the revaluation of UK energy supply hedging positions. Free cash flow more than doubled to £2.5 billion. Centrica made its first dividend payment since 2019 with the award of 1p a share in November and plans to pay a full-year dividend of 2p a share on 20 July.
How have shares performed? Up 33% to 96.5p (116.25p on Thursday).
How much is the boss paid? Chris O’Shea, who was appointed chief executive in 2020, has been given a salary increase of 2.6% to £815,000. His total remuneration for 2022 amounted to £4.5 million, up from £875,000 the previous year when he relinquished his bonus due to the hardships faced by customers caused by higher energy prices. The bonus scheme for 2022 paid 89.5% of the maximum opportunity, generating £1.42 million in cash and deferred shares. The 76% vesting of long-term incentives contributed £2.2 million to the final figure. Centrica said total shareholder performance over the three-year period has been strong against peers while other key metrics such as cash flow and operating profits had resulted in maximum outcomes.
How much is the new finance boss paid? Russell O’Brien started in the role in March on a salary of £540,000. This compares with £459,000 paid to predecessor Kate Ringrose during 2022. The remuneration committee said the increase took into account his “considerable relevant experience” in previous finance and treasurer roles at Shell.
How did last year’s AGM go? A new three-year remuneration policy was approved with 83.84% support. The policy replaced long term incentives with a restricted share plan, where the maximum share award is reduced from three times to a maximum of 1.5 times salary. Centrica said that potential pay-outs from restricted shares are far less variable than conventional long-term incentives and so more appropriate given the regulatory environment within which Centrica operates. The annual remuneration report was approved with 96.71% of votes in favour.
What’s the view of voting agencies? Glass Lewis notes that O’Shea’s remuneration outpaced the compensation given to chief executives at both country and industry peers. Whilst concerned at the value of vested long-term incentive awards, the agency said it did not believe this issue or the big rise in pay for the newly-appointed chief financial officer are sufficiently contentious to warrant opposing the remuneration report.
How’s the company doing on diversity? The company met or exceeded its board diversity targets at the end of 2022. This saw at least 40% female representation and one senior position held by a woman, with at least one director from a minority ethnic background.
International Airlines Group
When: 12 noon (central European time), Thursday 15 June.
Where: Duques de Pastrana, Paseo de la Habana, Madrid.
How to participate: International Consolidated Airlines Group SA (LSE:IAG) shareholders will be able to attend remotely. Proxy voting instructions must be received by midnight central European time on Wednesday, June 14. More AGM details and a guide for shareholders can be found here.
Who’s in the chair? Javier Ferrán has been in the role since June 2019. He also leads the board of Diageo.
How did the company do in 2022? The post-Covid recovery in demand and traffic was reflected in a passenger load factor of 81.8%, down 2.8 percentage points from 2019. This led to a near trebling in revenues to 23.1 billion euros (£20 billion) and operating profit of 1.26 billion euros (£1.1 billion), which compared with a loss of 2.76 billion euros in 2021. Earnings per share of 8.7 cents (7.55p) improved from a loss of 59.1 cents the previous year.
How have shares performed? Down 19% to 123.8p (157.7p on Thursday).
How much is the boss paid? Luis Gallego’s salary has been increased for this year by 4% to £852,800, his first pay rise since being appointed chief executive in 2020. His total remuneration for 2022 amounted to £2.6 million, including cash and deferred shares worth £1.4 million after the bonus scheme paid 83.5% of the maximum opportunity. Targets for long-term incentives were set before the onset of the Covid pandemic and did not vest. The remuneration committee said significant progress had been made in recovering profitability and performance, but did not feel it was appropriate to apply any discretion.
How did last year’s AGM go? A vote on the company’s updated remuneration policy, which included an increase in the potential opportunity under the long-term incentive scheme from 100% of salary to 150%, was supported with 74.47% of votes cast in favour. The annual remuneration report got support of 93.05%.
What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.
How’s the company doing on diversity? The board has 45% female representation and meets the Parker Review objective to have at least one director from a minority ethnic group.
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