Interactive Investor

Would you pay this inexperienced CEO £1 million a year basic salary?

7th October 2022 09:39

Graeme Evans from interactive investor

He’s young and married to the founder’s daughter, and shareholders are being urged to reject his seven-figure pay deal plus massive bonus.

The £1 million-a-year salary of new Frasers Group (LSE:FRAS) boss Michael Murray will be under the spotlight when founder Mike Ashley attends his final AGM as a director.

Proxy voting advisory firm Glass Lewis has raised concerns about the salary as well as the potential for excessive incentive scheme payouts after it emerged that Murray will land £100 million in shares if the stock price goes above £15 by October 2025.

Murray, who became chief executive in May after previously working on the FTSE 100-listed retailer’s “elevation” strategy, recently agreed to waive his first year’s pay.

Ashley, who owns 69% of the company he set up from a single shop in Maidenhead in 1982, said last month that the business has gone from “strength to strength” since Murray took the helm. He will continue to be available to the board in an advisory capacity.

Barratt Developments

When: 2pm, Monday 17 October.

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

How to participate: A live webcast is available but shareholders won’t be able to speak or vote through the platform. Questions relating to AGM business can be submitted during the webcast or in advance by email to Proxy voting forms must be received no later than 2pm, Thursday 13 October. More AGM details can be found here.

Who’s in the chair? Former Exel chief executive John Allan was appointed in November 2014. He is due to step down by next year’s AGM.

How did the company do in the year to 30 June? Home completions returned to pre-pandemic levels after an increase of 3.9% to 17,908. Revenues were 9.5% higher at £5.3 billion, resulting in adjusted pre-tax profits lifting 14.7% to £1.05 billion and adjusted earnings per share by 12.9% to 83p.  A final ordinary dividend per share of 25.7p is due to be paid on 4 November, resulting in a total for the year of 36.9p - up from 29.4p the previous year.

How have shares performed? Down 34% to 457.4p (352p on Thursday).

How much is the boss paid? David Thomas received a 3% pay rise in July, taking his base salary to £803,000. His bonus for 2021/22 came to £1.15 million in cash and deferred shares, based on 98% of the maximum opportunity. This award and the 2019 long-term incentive scheme payout of £743,000 were calculated on a pre-adjusted profit basis that excluded the £396 million cost of signing the government’s Building Safety Pledge to address fire safety issues on all buildings of 11 metres and above built in the last 30 years. Total remuneration for Thomas came to £2.9 million, which compared with £3.7 million the year before.

What’s the view of voting agencies? Glass Lewis believes the use of bonus discretion to account for building remediation costs caused by retrospective legislation has been justified by the company. It notes the appointment of finance director Mike Scott on a salary of £480,000, which is 13.7% higher than his predecessor. However, the agency believes this does not warrant shareholder action due to Scott’s previous experience at Countryside Properties.

How did last year’s AGM go? The remuneration report was backed with 98.03% of votes cast in favour.

How’s the company doing on diversity? The gender split on the board is 33% female, while Barratt Developments (LSE:BDEV) continues to meet the requirements of the Parker review in respect of ethnic diversity.

Dechra Pharmaceuticals

When: 9.30am, Thursday 20 October.

Where: 6 Cheshire Avenue, Cheshire Business Park, Lostock Gralam, Northwich CW9 7UA.

How to participate: There will be an opportunity to listen to the meeting remotely but shareholders doing so will not be able to vote. They should submit their votes by proxy no later than 9.30am, Tuesday 18 October. Questions in advance of the meeting should be sent to by 17 October. More AGM details can be found here.

Who’s in the chair? Alison Platt joined the board in 2020 and was appointed chair in January 2022. She was chief executive of Countrywide between 2014 and 2018.

How did the company do in the year to 30 June? The veterinary products business reported strong growth in all key markets and therapeutic segments, leading to revenues growth of 13.8% to £681.8 million. Underlying operating profit of £174.3 million represented a 9.4% increase on the prior year as earnings per share improved 14% to 120.84p. The payment of a final dividend of 32.89p on 18 November will mean the full year dividend increased by 10.8% to 44.89p.

How have shares performed? Down 21% to 3,458p (2,584p on Thursday).

How much is the boss paid? Ian Page, who joined Dechra Pharmaceuticals (LSE:DPH)’s former services business at its formation in 1989 and has been chief executive since 2001, is on a basic salary of £612,000 after a 5.1% increase was applied from January. His total remuneration for 2021/22 came to £2.1 million after the award of £549,000 equivalent to 92% of his base salary as an annual bonus. Long-term incentives vested at 65.5% of the maximum, generating £814,000.

What’s the view of voting agencies? Glass Lewis notes a 12.5% pay rise for finance director Paul Sandland, which took his base salary to £405,000. However, it acknowledges that the increases for Page and Sandland were made following a benchmarking review against companies ranked 51 to 150 in the FTSE 350 and that the finance boss was on a pay package significantly below his predecessor. It recommends support for the remuneration report.

How did last year’s AGM go? The annual remuneration report was approved with 92.98% of votes in favour.

How’s the company doing on diversity? The gender split on the nine-strong board is currently 33% female, but the company does not meet the Parker review target of one director from an ethnic minority background. Dechra has retained an executive search firm for diverse talent to assist with the succession plan for its remuneration committee chair.

Frasers Group

When: 9am, Wednesday 19 October.

Where: Auditorium, Unit D, Brook Park East, Shirebrook, NG20 8RY.

How to participate: Proxy voting forms need to be returned no later than 9am, Monday 17 October. More AGM details can be found here.

Who’s in the chair? Former Nike director David Daly, who was appointed in 2017.

How did the company do in the year to 24 April? The sports retail business increased revenues by 32.5% to £4.8 billion. Adjusted pre-tax profits were £339.8 million compared to a loss of £39.9 million in the prior period, with adjusted earnings per share of 53.9p. There was no dividend but the company returned £193.2 million through a share buyback programme.

How have shares performed? Up 34% to 690p (665p on Thursday).

How much is the boss paid? Michael Murray has been appointed on an annual salary of £1 million, although he has agreed to waive this for the current financial year. Murray, who played a key role in developing the company’s strategy before being named one of the youngest bosses in the FTSE 350 index, is eligible for an annual bonus worth up to 200% of salary dependent on one or more performance metrics. Under a new long-term executive share scheme approved at the 2021 AGM, he was granted an award of 6.7 million shares which will vest subject to a £15 share price target. Founder and controlling shareholder Mike Ashley, who is Murray’s father-in-law, did not receive a salary in his executive role in the 2021-22 year and is due to stand down at this year’s AGM.

How did last year’s AGM go? The directors’ remuneration report was approved with 86.27% of votes in favour, while the remuneration policy was backed with 84.92%. 

What’s the view of voting agencies? Glass Lewis questions the decision to set Murray's salary at a level above the median of the company's peers, particularly given his lack of experience as a senior executive at a publicly listed company. It also remains concerned by the potential for excessive payouts under the executive share scheme, adding that it regards the remuneration committee's response to shareholder dissent at the 2021 AGM as insufficient. It recommends shareholders vote against the annual remuneration report.

How’s the company doing on diversity? Glass Lewis is concerned that board-level

gender diversity has remained static at 29% for the past three years. As a result, the agency recommends that shareholders vote against the re-appointment of David Daly, as he is the chair of the nomination committee. There is currently no representation from ethnic minority backgrounds on the board.

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