Interactive Investor

Your vote counts: scrutinising Superdry’s pay and bonus plan

15th October 2021 09:42

Graeme Evans from interactive investor

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Plenty of pay policies have been waved through by shareholders recently, but will fashion boss Julian Dunkerton get the thumbs up? 

A big pay rise for the boss of high-flying FTSE 250 stock Dechra Pharmaceuticals (LSE:DPH) will be up for discussion at the AGM of the animal health products firm next week.

Long-serving chief executive Ian Page, who has been in charge for two decades, has seen his salary boosted to reflect the company's significant growth over a five-year period during which his pay had previously only increased once.

The AGM of Superdry (LSE:SDRY) will also consider a new long-term incentive scheme the fashion retailer believes will reflect the challenges of resetting the business and aid management retention.

At AGMs held this week, Rank Group (LSE:RNK) got 90% support for its remuneration policy and a recovery incentive scheme that links rewards with financial targets associated with the rebuilding of the bingo and casinos company after the pandemic.

Dechra Pharmaceuticals

When: 9.30am, Thursday 21 October

Where: Dechra's offices at Cheshire Business Park, Lostock Gralam, Northwich, CW9 7UA

How to participate: There will be online coverage of the AGM for the first time. Shareholders wishing to attend in person are asked to email companysecretarial@dechra.com by today. Questions should be submitted to the same address by Tuesday 19 October and proxy voting forms are required by 9.30am on the 19th. Further AGM details can be found here.

Who's in the chair? Tony Rice, former Cable & Wireless chief executive.

How did the company do in the year to 30 June? The FTSE 250-listed veterinary and animal health products business increased revenues by 21% to £608 million as expenditure per pet increased during lockdowns, leading to a 29.2% rise in underlying earnings to £162.2 million. The final dividend was lifted by 18.1% to 40.5p a share and is due to be paid on 19 November.

How much is the boss paid? Ian Page's salary increased 12% to £582,400 in 2021 and is set to rise another 5% from January to £612,000, subject to performance. Page's total remuneration package came to £2.6 million for 2020/21, including an annual bonus worth the maximum of £551,000 and the vesting of long-term incentives worth £1.38 million.

Why the big pay rises? Dechra is now much larger and complex after growing operating profits by 18.8% and dividends by 17.2% on a compound basis over the past four years, a period when market cap lifted 315%. Page's salary went up once in that four-year period. The review also focused on the lowest paid, including increases in line with being a living wage employer.

How else is remuneration changing this year? The CEO's annual bonus opportunity of 100% has risen to 125% in 2022, following approval from shareholders at the 2020 AGM. No changes are proposed to the long-term incentive plan, which will be granted at up to 200% of salary. Higher base pay boosts the potential variable rewards, but Dechra says the bulk of this is performance related and aligned with the interests of shareholders.

What's the view of the voting agencies? Glass Lewis says compensation is in line with best practice guidelines and has recommended voting in favour of the remuneration report.

What happened at last year's AGM? The remuneration report got 99% support, with the triennial vote on remuneration policy backed by 90.8%.

How is the company doing on diversity? The company meets the requirements of the Hampton Alexander review as 40% of its board composition is female. This falls to 27% for its senior executive team. It has also acknowledged the need to do more to attract a wider and more diverse talent pool.

Superdry

When: 10am, Friday 22 October

Where: the company's head office, The Runnings, Cheltenham, Gloucestershire GL51 9NW

How to participate: there will be a webcast of the AGM with the option to ask questions, but those viewing will not be able to vote. Proxy votes are required no later than 10am on Wednesday 20 October. Further AGM details can be found here.

Who's in the chair? Peter Sjölander, former chief executive of Helly Hansen.

How did the company do in the year to 24 April? Revenues fell by a fifth to £556.1 million after 39% of store days were lost due to Covid-19, but the help of cost saving measures and government support meant the adjusted loss reduced to £12.6 million. The period also saw a significant strategic overhaul, including progress on a brand reset.

How much is the boss paid? Founder Julian Dunkerton was made permanent chief executive in December after returning initially as interim boss in April 2020. His salary is £600,000.

What's changing in the remuneration policy? The company is switching long-term incentives to Restricted Share Awards (RSAs), which grant up to 75% of salary compared with the maximum of up to 200% under more conventional Performance Shares Plan (PSP) awards. No performance measures apply to RSAs, but discretion is still applied in terms of key metrics.

Superdry's remuneration committee believes this is more appropriate for the company's culture than the highly geared, PSP structure and should also aid management retention, given that a bonus was last paid to executive directors in 2018 and outstanding PSP awards are unlikely to vest. The policy also allows for an annual bonus worth up to 150% of salary, although this is being capped at 100% in the current year.

What's the view of voting agencies? Glass Lewis is in favour of both the annual remuneration report and the binding vote on the remuneration policy. It said: “We believe the proposed overall opportunity under annual bonus and restricted share plan is reasonable relative to peers.”

How did last year's AGM go? The remuneration report was approved with 99.66% of votes, while the remuneration policy got 96.67% support.

How is the company doing on diversity? Superdry’s board composition for minority ethnic communities is 14% and the percentage of women is 29%.

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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