Your vote counts: experts split over Primark owner’s pay plan

AB Foods is one of the last big AGMs of 2021, and shareholders have some tough decisions to make. Graeme Evans has all the details.

Primark's pandemic store closures and their impact on pay outcomes at owner Associated British Foods (LSE:ABF) will be a potential source of controversy at the company's AGM next week.

With earnings targets under the 2018 long-term incentive plan unable to be met, the FTSE 100-listed firm used a new performance framework that subsequently meant 40% of the original award was able to vest. This was worth £752,000 for chief executive George Weston.

AB Foods said the framework was shared with executives at the start of the year and that an “exceptional performance in exceptional circumstances merits an exceptional approach”. No annual bonus or long-term incentives were awarded to directors the previous year.

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However, Institutional Shareholder Services calls the performance framework “highly subjective” and has recommended shareholders vote against the remuneration report.

Associated British Foods

When: 11am, Friday 10 December

Where: Congress Centre, 28 Great Russell Street, London WC1B 3LS

How to participate: There will be a live broadcast of the event available online, but shareholders not attending in person are reminded they will need to appoint a proxy in advance so that their vote is counted. This must be received by 11am on Wednesday 8 December. More details can be found here.

Who's in the chair? Michael McLintock, former chief executive of M&G.

How did the company do in the year to 18 September? Revenues and adjusted operating profit were in line with last year, but at £13.9 billion and £1 billion respectively were impacted by a third of available trading days being lost at Primark. There was a strong performance in sugar operations, international growth in grocery and progress in agriculture and ingredients. A final dividend of 20.5p and special award of 13.8p will be paid to shareholders on 14 January.

How much is the boss paid? George Weston, who has been chief executive since 2005, has just been granted his first pay rise since 2017 with this month's 2.7% increase in salary to £1.12 million. His total remuneration package for the last financial year came to £3.34 million after he secured 80% of his salary through a short-term bonus scheme and a further £752,000 from the vesting of shares in the 2018 long-term incentive scheme.

What's the view of voting agencies? Institutional Shareholder Services is opposed to the remuneration report after discretion was used on the 2018 long-term incentive scheme. Rather than the original earnings per share targets, it said awards were informed by a “highly subjective” performance framework, resulting in 40% of the shares vesting. Fellow proxy voting group Glass Lewis recommends support for the remuneration report, noting a number of mitigating factors such as the use of downward discretion on short-term bonuses. 

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What's the view of the company? It said in the annual report: “Having the long-term incentives predestined not to vest did not feel aligned to the principles of our performance-based approach, nor would it support the recruitment and retention of senior leaders in a very competitive talent market.”

How did last year's AGM go? The annual remuneration report received 99% of votes in favour.

How is the company doing on diversity targets? The board meets the recommendations of the Parker and Hampton-Alexander reviews concerning gender and ethnic minority representation.

Softcat

When: 11.30am, Wednesday 15 December

Where: Solar House, Fieldhouse Lane, Marlow, Buckinghamshire SL7 1LW

How to participate: Shareholders will be able to vote electronically at Softcat's (LSE:SCT) AGM, no later than 11.30am on Monday 13 December. Questions should be submitted to the company secretary at cosec@softcat.com by 11.30am on 14 December. More details on the AGM can be found here.

Who's in the chair? Martin Hellawell, who served as CEO and MD between 2006 and 2018 and led the company through its IPO and the first two years as a stock market company.

How did the company do in the year to 31 July? The FTSE 250-listed IT services business achieved record results as revenues rose 7.4% to £1.16 billion and operating profits lifted 27.4% to £119.4 million, leading to earnings per share 26.7% higher at 48.4p. A final dividend of 14.4p a share and special dividend of 20.5p will be paid on 20 December.

How much is the boss paid? Graeme Watt, who became chief executive in 2018, saw his base salary rise to £525,000 from August, a 10% increase that Softcat said reflected the company's move from a mid-tier FTSE 250 company to one in the top 50. Watt's bonus for 2020/21 was £716,108 after comfortably exceeding targets for operating profit in the year. The vesting of long-term incentive awards worth £1.37 million took his total remuneration to £2.6 million.

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What's the view of voting agencies? Glass Lewis said 10% salary increases for Watt and chief financial officer Graham Charlton are reasonable relative to peers and do not warrant shareholder action. It notes larger maximum payouts under the annual bonus scheme may increase the focus on short-term gains, but believes this imbalance should be addressed by the maximum opportunity in the long-term incentive scheme increasing to 150% of salary. Other changes this year include ESG goals now accounting for 20% of the annual bonus target. Glass Lewis recommends shareholders vote in favour of the annual remuneration report. 

How did last year's AGM go? The advisory vote on the remuneration report received 97.69% votes in favour.

How is the company doing on diversity targets? Softcat has 50% gender diversity at board level, above the 33% recommended by the Hampton-Alexander review for FTSE 350 companies. It also meets the recommendation set by the Parker review that boards should have at least one person of colour.