Interactive Investor

Your vote counts: Shell, Blue Prism, Tullow Oil

Next week is light on AGMs but there are some significant developments to vote on.

12th March 2021 14:09

Graeme Evans from interactive investor

Next week is light on AGMs but there are some significant developments to vote on.


Royal Dutch Shell (LSE:RDSB) shareholders still dwelling on a first ever post-war dividend cut have good reason for taking a closer look at this week's annual report from the oil giant.

Their focus will be on remuneration and whether the pay packets of chief executive Ben van Beurden and other directors adequately reflect the 2020 dividend shortfall, and the difficult year experienced by all the company's stakeholders, including staff.

The report discloses that van Beurden's pay package dropped by 42% to 5.8 million (£5 million), one of the lowest figures in the past decade after two years in a row of cuts.

The oil giant's remuneration committee determined there should be no annual bonus on top of his base salary of €1.59 million, although the CEO did receive €3.7 million under a long-term incentive plan. This was a reduction of 49% on 2019.

The report said the decision to not pay 2020 annual bonuses “appropriately reflected” Shell’s performance, including the lower profits and asset write-downs and dividend changes after the quarterly pay-out was reduced by two-thirds in April.

The remuneration committee noted that most staff also got no 2020 bonus and will not receive a 2021 salary increase, which is the case for van Beurden.

The verdict of institutional and retail shareholders on the pay decisions won't be known until nearer the company's AGM, which usually takes place in May. Last year's meeting saw just under 5% of shareholder votes going against the remuneration report.

This week's annual report from Shell highlights the challenges facing remuneration committees of all sizes as they seek to send the right message on pay but still recognise the efforts of management and the need to keep leadership teams incentivised.

The main AGM season begins in April but the annual reports ahead of these meetings are now coming thick and fast, giving shareholders a chance to consider their proxy votes.

Next week is light on AGMs but there are some significant developments to vote on, including concerning the future of FTSE 250-listed Signature Aviation.

Blue Prism (16 March)

One issue raised at last year's Blue Prism (LSE:PRSM) AGM was the company's failure to disclose a specific target for the revenues benchmark within its long-term incentive plan (LTIP).

The intelligent automation business has looked again at the matter ahead of this year's AGM, and continues to think it is not in its best interests to provide fuller disclosure when it operates in a fast-growing and highly competitive market.

Remuneration committee chair Rachel Moody said the company is still committed to publishing full detail of all LTIP targets retrospectively alongside assessment of performance.

About 13% of shareholder votes went against the advisory resolution concerning last year's remuneration report, which based on feedback was also likely to be due to a salary increase for chief financial officer Ijoma Maluza in 2019/20.

No pay rise was approved for this financial year and the economic disruption caused by Covid-19 meant there was also no payment for executive directors under the revenue element of the annual bonus scheme, although Maluza did get 15% or £37,125 in respect of individual goals. This has been paid as a deferred share award with a 12-month holding period.

The AGM at 3.30pm on Tuesday will be a closed meeting, but the company has set up a dedicated email address for shareholders to ask questions. There was a deadline of Friday afternoon for the return of proxy voting forms.

Safestore Holdings (17 March)

Management's record since joining the self-storage group in 2013 is recognised in the annual remuneration report, which noted that £100 invested seven years ago had become £717 by the end of October when factoring in re-invested dividends.

Safestore (LSE:SAFE), which is listed in the FTSE 250 index, said the progress under the leadership of chief executive Frederic Vecchioli and chief financial officer Andy Jones represented significant outperformance against key competitors and industry benchmarks.

The results for 2020 were a continuation of that strong showing, with underlying earnings up 7.3% and total shareholder returns of 19.8% equating to £285 million of value.

Vecchioli secured his maximum bonus opportunity in relation to 2020 trading, with the award of £630,000 contributing to overall remuneration of £1.1 million last year. The salaries of the two executive directors were increased by 1% from September but this is below the 2.3% average increase applied to the wider workforce.

Last year's AGM saw strong support for the company's remuneration report and policy, with 98% and 97% of votes in favour respectively.

Tullow Oil (18 March)

The sale of assets in Equatorial Guinea as part of the company's ongoing debt-reduction effort will require the approval of shareholders.

Tullow (LSE:TLW) announced last month that it had signed separate agreements with Panoro Energy for all of its assets in Equatorial Guinea and its Dussafu asset in Gabon. Tullow chief executive Rahul Dhir said the two agreements were worth £180 million and in line with a strategy of focusing on cash-generative, high return investment opportunities.

He said the Equatorial Guinea assets had been an “important and stable part” of Tullow's non-operated West Africa producing portfolio since 2003.

Dhir added: “We will be exiting Equatorial Guinea after many years of successful investment and co-operation and we thank the government of Equatorial Guinea for their continued support.”

The transaction is dependent on the approval of Tullow's shareholders by a simple majority of votes cast at the general meeting. Tullow told investors in annual results this week that it believes an agreement on its debt refinancing can be reached in the first half of this year.

Signature Aviation (18 March)

The private jet services business is being taken over by a consortium including private equity firm Blackstone and the Cascade investment vehicle of Microsoft founder Bill Gates.

The deal is worth £3.5 billion and was made possible by a rival bidder, Gatwick Airport's part owner Global Infrastructure Partners, switching camps to join the 411p a share bid.

Shareholders are being asked to vote on a scheme of arrangement ahead of virtual meetings taking place from 1.30pm on Thursday.

Signature (LSE:SIG), which used to be known as BBA Aviation, provides support services for business and general aviation, including fuelling, ground handling and passenger and pilot amenities. Most of its operations are in the US, with a presence at 38 of the country's 50 top airports and all of the top ten.

Cascade made its first investment in Signature in 2009 and holds a 19% stake in the FTSE 250-listed business in conjunction with the Bill and Melinda Gates Foundation Trust. Signature shares had been at 265p prior to the takeover battle.

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