Interactive Investor

Your vote counts: FTSE 250 firm faces revolt against £100m bonus

24th September 2021 09:10

Graeme Evans from interactive investor

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It’s worth £3.5 billion, but an influential group believes this famous but often controversial company needs bringing into line.

The AGMs of smaller companies provide retail investors with the chance of closer engagement with management than is usually seen at larger listed companies.

Companies such as fuels, feed and food distribution firm NWF Group (LSE:NWF), which holds its AGM in Crewe next Thursday, welcome the chance to hear from all shareholders, whether at the meeting or at other times of the year through the staging of webinars.

As well as getting closer to management, there's also greater chance that the collective voice of individual shareholders will hold more sway at AGMs.

Three pension funds registered in Iceland each own 5% of NWF's share capital, but the next biggest stake is listed as interactive investor clients holding more than 4% of the shares.

As an AIM-listed company, NWF isn't obliged to put as many resolutions before shareholders as main list companies. However, this year it will hold an advisory vote on its remuneration report for the first time as part of an “evolving” corporate governance framework.

NWF, which was known as North Western Farmers until 1988, was established in 1871 by a small group of farmers to give themselves purchasing power. It has been on AIM since the junior market started in 1995.

At the other end of the company scale, next week's AGM calendar features Guinness and Smirnoff drinks giant Diageo on Thursday. We previewed the AGM last week, with shareholders having until Tuesday to register their proxy votes.

The AGM of retailer Frasers Group (LSE:FRAS) will also be closely watched on Wednesday. Voting advisory group Glass Lewis has recommended that shareholders vote against three resolutions, including an executive share scheme after it was revealed that incoming chief executive Michael Murray stands to receive £100 million if the share price hits a certain level.

Frasers Group

When: 9am, Wednesday, 29 September

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

How to participate: Proxy votes must be received by 9am, 27 September

Who is in the chair? David Daly, who had a 30-year career with Nike.

How did the group do in the year to April? The Sports Direct and House of Fraser owner is predominately a bricks-and-mortar business, with the closure of all its UK stores for some six months due to lockdowns causing revenues to fall 8.4% to £3.6 billion and underlying profits to slide 95.1% to £5.8 million. Property write-downs led to a loss of 16.5p a share.

How much did the boss get? Mike Ashley founded the Sports Direct business as a small sports and ski store in Maidenhead in 1982 and has not received any remuneration from the company since before the flotation in 2007. His 66.7% stake is worth £2.2 billion, however.

Who was the best paid director? Appointed in September 2019, chief financial officer Chris Wootton received a base salary increase of 66.7% from £150,000 to £250,000, effective from May this year. He also got a bonus of £100,000 to reflect his “exceptional efforts” through the pandemic. On the pay rise, the remuneration committee said: “We are content that even with this increase the salary level for our CFO remains amongst the lowest in the FTSE 250.”

Who is Michael Murray? The fiancé of Ashley's daughter Anna is currently head of elevation strategy and is set to become group chief executive from May next year. His pay is under review and will be subject to shareholder approval. But under an executive share scheme, it has already been disclosed that Murray will receive £100 million in shares subject to a £15 a share target, which compares with 670p currently.

What's the view of voting agencies? Concerns over the executive share scheme, which also rewards Wootton at a threshold of £12 a share, have been raised by Glass Lewis due to the plan favouring short spikes in performance over long-term sustainable growth. It recommends a vote against the scheme under resolution 14, as well as against the triennial vote on the remuneration policy. The decision to give Wootton a discretionary bonus also means it recommends voting against the annual remuneration report.

Anything else in the annual report? The board has extended the Worker’s Representative Board role held by Cally Price until 2024. Price, who joined the company in 2007 as a casual sales assistant and now manages a store in Cardiff, will be proposed for re-election at the AGM. Frasers said her role was an example of good corporate governance: “Cally has had a huge impact on the board and successfully acts as a conduit between the workforce and directors.”

What about diversity targets? There are two female directors, representing 28% of the board. There is currently no representation from ethnic minority backgrounds on the board.

NWF Group

When: 10.30am, Thursday 30 September

Where: Wychwood Park Hotel, Weston, Crewe CW2 5GP

How to participate: Shareholders wishing to attend should email investor.relations@nwf.co.uk in advance. There will be a live webcast of the meeting, which allows questions to be asked during the meeting. Shareholders watching via the webcast cannot participate in voting but can do so by proxy, as long as the vote is received by 10.30 am on Tuesday 28 September.

Who is in the chair? Philip Acton, former finance director of Genus.

How did NWF perform in the year to 31 May? Profits were 10% lower, but the distributor of fuel, food and feed exceeded pre-pandemic market expectations and delivered its second highest profit on record, only beaten by the prior year's boost caused by a significant fall in the oil price. It increased the total dividend for the tenth successive year, by 4.3% to 7.2p per share.

How much is the boss paid? Richard Whiting received a 2% increase in basic salary to £309,250 from June. Total pay for the 2020/21 year was £764,000, including a bonus of £182,000 after 61.4% of the maximum opportunity was paid. For the first time, the AIM-listed company's remuneration report will be subject to an advisory shareholder vote, a move that NWF said reflects its evolving governance framework.

How did last year's AGM go? The nine resolutions, including the re-election of the five board members, were carried with 96% or more of votes cast in favour.

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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