Interactive Investor

Your vote counts: Berkeley Group and Halfords in focus

26th August 2022 10:07

Graeme Evans from interactive investor

With the summer lull for AGMs behind us, it’s time for shareholders to resume their focus on pay and other policies at companies in which they have interests.

Long-term incentives for one of Britain’s best-paid house building bosses will be under scrutiny when Berkeley Group (LSE:BKG) hosts its annual general meeting.

Rob Perrins got £8 million in the last financial year but the focus for shareholders will be on a new remuneration policy for executive directors, including a long-term option plan.

The company suffered a big protest vote the last time it updated its remuneration policy in 2019 and voting advisory group Glass Lewis is recommending shareholders go against this updated version. It believes the company has not provided a compelling rationale for the scheme’s introduction over a more traditional long-term incentive framework. 

Berkeley Group

When: 11am, Tuesday 6 September.

Where: Herbert Smith Freehills, Exchange House, Primrose Street, London EC2A 2EG

How to participate: Proxy votes need to be registered no later than 11am on 2 September via or by sending a paper copy. More AGM details can be found here.

Who’s in the chair? Glyn Barker, who had a 35 year career with PwC, is stepping down after the meeting and will be succeeded by former Schroders chief executive Michael Dobson.

How did the company do in the year to 30 April? Revenues rose 6.6% to £2.35 billion after the housebuilder delivered 3,760 homes and 872 in joint ventures, representing a 42% increase. Pre-tax profits lifted 6.4% to £551.5 million and earnings per share by 23.1% to 417.8p. Shareholder returns amounted to £515.2 million, which included the award of surplus capital of 371p a share or £451 million in September 2021.

How have shares performed? Down 12% to 4,080p (3,740p on Thursday).

How much is the boss paid? Rob Perrins, who has been chief executive since September 2009, has seen his 2022-23 salary increase by 3% to £597,000. The company does not operate a bonus plan for executive directors, but performance conditions under the long-term incentive scheme were met in full, meaning that the maximum level of options vested. This resulted in total remuneration of £8 million, the maximum allowed under the cap put in place for the financial year.

How is the company’s remuneration policy changing? Long-term incentives are to be split between a restricted share plan and a long-term option plan. Annual grants of restricted shares will be made from September, with vesting after four years being subject to return on equity and strategic underpins. One-off options will have an exercise price equal to the higher of the share price at grant and £48.50, with vesting in five annual tranches from 2026. The exercise price of the options increases by £2.50 per year from September 2027 onwards.

What’s the view of voting agencies? Glass Lewis said it remains troubled by the terms of the proposed long-term option plan and believes the company has not provided a compelling rationale for its introduction over a more traditional long-term incentive framework. It said: “We note that such plans are also uncommon among the company's peers, the majority of which operate standard long-term incentive plans, with clearly defined and quantifiable performance criteria measured over three years.” The agency has recommended shareholders vote against the remuneration policy but support the annual remuneration report.

What’s the company view? It says the option plan enables participants to incentivise above market long-term growth in value, while the restricted share plan is intended to drive longer-term performance that is aligned to the wider business strategy, The arrangements also reflect the lack of annual bonus within the incentive structure.

How did last year’s AGM go? The annual remuneration report was backed with 92.5% of votes in favour. The most recent vote on the remuneration policy took place in 2019 and saw 43% of votes go against the company.

How is the company doing on diversity? The gender split of the board was 33% female at the end of the year. The group also meets the ethnic diversity target set by the Parker Review.


When: 3pm, Wednesday 7 September.

Where: Support Centre, Icknield Street Drive, Washford West, Redditch, B98 0DE.

How to participate: Questions for directors can be emailed in advance, with answers to the most commonly asked questions published on the company’s website ahead of the meeting or addressed at the AGM itself. Proxy voting instructions need to be returned by 3pm, Monday 5 September. More AGM details can be found here.

Who’s in the chair? Keith Williams, the former British Airways chief executive and current Royal Mail chair, has been in the role since July 2018.

How did the company do in the year to 1 April? Revenues of £1.37 billion rose 6% on a year earlier, or 19.9% over the pre-pandemic period in 2020. Pre-tax profits rose 49.8% to £96.6 million but underlying earnings per share fell 14.9% to 35.5p. Having reinstated dividend payments in January, Halfords is planning a final dividend of 6p share on 16 September.

How have shares performed? Down 32% to 259.2p (127.8p on Thursday).

How much is the boss paid? Graham Stapleton’s basic salary of £575,710 is due to be reviewed in October, when it is expected that any increase will be in line with the wider workforce. His total remuneration for the financial year of £3.1 million included £679,352 under the annual bonus scheme, which paid out 79% of the maximum opportunity based on financial and strategy benchmarks. The rest of his package came from 2019’s long-term incentive awards, which vested at 100% of their total and are worth about £1.8 million.

What’s the view of voting agencies? Glass Lewis notes that new chief financial officer Jo Hartley is on a base salary of £395,000, which is 7% higher than her predecessor’s. However, given Hartley’s experience at Virgin Active and salary relative to companies of a similar market size it does not think this warrants action. It recommends that shareholders support the resolution on the annual remuneration report.

How did last year’s AGM go? The directors’ remuneration report was approved with 96.86% of votes in favour.

How’s the company doing on diversity? There’s a 50:50 gender split on the board, while 44% of senior management roles are held by women.  The company has a target of improving ethnic diversity on the board by 2023.

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