Interactive Investor

Your vote counts: bingo, bonuses and problematic pay

8th October 2021 10:48

Graeme Evans from interactive investor

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Here’s what to expect at three of the most interesting company meetings taking place over the next few weeks. Find out which way the experts would vote.

The Mecca bingo and Grosvenor casinos business Rank Group (LSE:RNK) will be in the AGM spotlight next week when it asks shareholders to approve a new incentive scheme for management.

Rank has focused potential rewards on meeting financial targets linked to the company's recovery from the pandemic, but voting advisory group Glass Lewis is unsure about the merits after recommending shareholders vote against the proposals.

Fellow FTSE 250 stock Ashmore Group (LSE:ASHM) and household goods firm McBride (LSE:MCB) also host AGMs, while previews for BHP (LSE:BHP) and Barratt Developments (LSE:BDEV) featured in our coverage last week.

Rank Group

When: 11am, Thursday 14 October

Where: TOR, Saint-Cloud Way, Maidenhead SL6 8BN.

How to participate: Proxy votes are required by 11am, Tuesday 12 October.

Who's in the chair? Alex Thursby, who has 30 years experience in banking.

How did the company perform in the year to June? Rank’s Mecca bingo halls and Grosvenor casinos felt the impact of Covid-19 throughout the year, whether local lockdowns or closures. With its digital business also hit by a stringent approach to affordability restrictions, the company recorded a loss per share of 16.5p and was unable to pay a dividend.

How much is the boss paid? John O'Reilly is currently on a basic salary of £500,000 for 2021-22, having received a total package worth £746,862 for the previous financial year. This included the vesting of shares from a three-year incentive scheme but no annual bonus.  

Why is Rank changing its remuneration policy? A one-off incentive plan will focus on the financial targets needed for the business to recover over the next two years. Replacing the triennial policy agreed at last year's AGM aims to address concerns about the retention of key directors and ensure they are incentivised during the recovery.

The Recovery Incentive Scheme offers 100% of salary in performance shares and is focused on meeting “challenging” financial targets around net gaming revenue and profits. This is on top of the usual annual bonus paying O'Reilly up to 150% of salary and a long-term incentive scheme worth 200% of salary for O'Reilly and which is based on the benchmarks of total shareholder return, earnings per share and various strategic measures.

What's the view of voting agencies? Glass Lewis recommends voting in favour of the annual remuneration report, but says the one-off incentive scheme is misaligned with the recent experience of shareholders and wider stakeholders. It also points out that the short-term vesting period makes the scheme an ineffective vehicle to promote retention. Glass Lewis recommends opposition to the binding vote on the remuneration policy, as well as the separate resolution on the recovery incentive scheme.

How is the company doing on diversity? The company meets the Hampton-Alexander target of at least 33% female directors and the requirements of the Parker review on ethnic diversity.

What happened at last year's AGM? The remuneration policy was approved with 96.4% of votes cast, reduced to 89.3% without Rank's major shareholder. The annual remuneration report got 90.79% of votes, or 73.02% without the 56% stake of Malaysia's Hong Leong.

Ashmore Group

When: 12 noon, Friday 15 October

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

How to participate: Proxy voting forms are required by noon on Wednesday 13 October.

Who's in the chair? David Bennett, former Alliance & Leicester CEO and current chairman of Virgin Money UK.

How did the company perform in the year to 30 June? The emerging markets specialist reported a 13% increase in assets under management to $94.4 billion as it benefits from the early stages of a cyclical recovery. Ashmore’s pre-tax profits rose 28% to £282.5 million while the board declared an unchanged final dividend of 12.1p a share for payment on 10 December.

How much is the boss paid? Mark Coombs founded the business which became Ashmore in 1992 and is majority shareholder controlling more than 30% of the company. He has received an annual salary of £100,000 for the past decade but is eligible for various bonus and long-term incentives tied to performance. His total remuneration for the year came to £2.35 million, including £1.1 million from the vesting of long-term incentive schemes.

What's the view of voting agencies? Glass Lewis said shareholders should be mindful of the unique remuneration structure, which it calls problematic. However, it added: “On balance, and given the reasonable pay outcomes in light of performance, we do not believe shareholder action is required at this time.”

How did last year's AGM go? The remuneration report received 90% support, but the triennial vote on the remuneration policy only got 69% support. Ashmore noted in April that this reflected concerns that “specific elements of the remuneration policy, when looked at in isolation, do not conform to generic executive remuneration guidelines”.

How is the company doing on diversity? The board meets the requirements of the Hampton-Alexander review, with two out of its six directors being female. The Parker review recommends companies of Ashmore's size have one director from an ethnic minority background on the board by the end of 2024.

McBride

When: 2pm, Tuesday 19 October

Where: Building C, Central Park, Northampton Road, Manchester M40 5BP

How to participate: Proxy votes are required by 2pm, Friday 15 October

Who is in the chair? Jeffrey Nodland, former chief executive of US-based KIK Custom Products.

How did the company perform in the year to 30 June? Sustained price rises meant McBride’s final quarter’s trading for the household cleaning products firm was significantly weaker than the first nine months of the financial year, resulting in adjusted profits falling 17.8% to £19.9 million and no final dividend. A new divisional structure was put in place at the start of 2021.

How much is the boss paid? Chris Smith, who was appointed as CEO in June 2020, is on an annual salary £439,350 effective from January 2021. His total pay for 2020/21 came to £551,000 after no annual bonus was paid and 2018 long-term incentives did not vest.

How did last year's AGM go? The remuneration report was backed by 89% of votes, with the binding triennial vote on remuneration policy approved by 87.6%.

How is the company doing on diversity? One member of the board is female (12.5%), with an objective for this to be not less than 28% by the end of 2022 and 30% by 2025.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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