Blue-chip AGMs are coming thick and fast. Here’s what shareholders need to know, including on bonus controversies at two companies.
Whitbread (LSE:WTB) faces another rough ride at its AGM after boss Alison Brittain received a £1 million bonus in a year when the Premier Inn owner got further Covid support.
Advisory group Glass Lewis is recommending shareholders vote against the annual report, a year after more than a third of votes went against the company at the 2021 AGM. Brittain subsequently declined to take her deferred bonus, but is due one for this year.
Other high-profile AGMs taking place this month include the meetings of Tesco (LSE:TSCO) and British Airways owner International Consolidated Airlines Group (LSE:IAG), where there’s a potential flashpoint over plans to increase the long-term bonus opportunity for the chief executive.
When: 2pm, Wednesday 15 June.
Where: Whitbread Court, Houghton Hall Business Park, Porz Avenue, Dunstable, LU5 5XE.
How to participate: Shareholders can either attend the AGM in person or join the meeting remotely through the Lumi platform, which will allow for questions and live voting on all resolutions. Questions in advance of the AGM should be submitted to email@example.com by 2pm on 13 June, the same deadline as for the return of proxy voting forms. More AGM details can be found here.
Who’s in the chair? Former Royal Mail and ITV chief executive Adam Crozier, who was appointed to the role in March 2018.
How did the company do in the year to 3 March? Revenues of £1.7 billion were 189% ahead of 2021, reflecting the strong recovery in sales post Covid restrictions, and the growth of the Premier Inn estate in the UK and Germany. Pre-tax profits of £58.2 million, compared to a £1 billion loss the previous year. Dividends resumed with the £70 million award of 34.7p a share for payment on 1 July.
How have shares performed? Down 25% to 2,703p (2,723p on Tuesday).
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How much is the boss paid? A 3% pay rise applied from last month took Alison Brittain’s basic salary to £921,000. Her total remuneration for 2021/22 came to £2.16 million, which included £1.09 million of cash and shares from an annual bonus scheme. The award was initially 95.2% of the maximum opportunity, based on “exceptional performance” by executive directors on criteria around profitability and efficiency savings and after discounting Government support. However, this was reduced to 71.4% in order to further reflect the company’s use of the Coronavirus Job Retention Scheme for three months of the financial year.
What happened at last year’s AGM? A significant minority of shareholders — 35.75% — voted against the remuneration report. The lack of support reflected the award of bonuses for 2020/21 at a time of government pandemic support, although they were carried over until 2021/22 subject to the achievement of certain objectives. These were met but Brittain and human resources director Louise Smalley opted not to take the incentives.
How is the company’s remuneration policy changing? At least 60% of future years' incentives will be based on financial metrics, compared with 50% originally, and that profit will be the predominant financial benchmark..
What’s the view of voting agencies? Glass Lewis has severe reservations about the remuneration report. It said: “We do not believe such a significant bonus payout in terms of maximum opportunity is reconcilable with the significant utilisation of such a wide range of government support without, to the best of our knowledge, the company having paid any such funds back.” It recommends support for the binding vote on the remuneration policy.
How’s the company doing on diversity? Following Louise Smalley’s departure, three out of ten board members are female. Whitbread said: “We have plans to increase this in the upcoming year, ensuring we align to the recommendations in the FTSE Women Leaders Review.” Three members of the board identify as Black, Asian or mixed ethnicity.
When: 2pm, Friday 17 June.
Where: Heart building, Shire Park, Welwyn Garden City, Herts, AL7 1TW.
How to participate: Shareholders will be able to watch via a live webcast on the company’s website, although there’s no facility to vote or ask questions. Proxy voting instructions need to be received by Wednesday 15 June. More AGM details can be found here.
Who’s in the chair? Former Exel chief executive John Allan, who was appointed in March 2015. He also leads the board of Barratt Developments.
How did the company do in the year to 26 February? Revenues increased 6% to £61.3 billion or by 2.5% when excluding fuel sales growth of 48.1%. Pre-tax profits jumped 219.7% to just over £2 billion and net debt reduced by £1.4 billion year-on-year. A final dividend of 7.70p a share will be paid on 24 June, taking the full-year dividend to 10.90p for an increase of 19.1% on a year earlier.
How have shares performed? Up 27% to 286.5p (259p on Tuesday).
How much is the boss paid? Ken Murphy’s salary for 2022/23 has been increased by 2.25% to £1.38 million. His annual bonus in cash and shares amounted to £3.2 million in the last financial year, which was based on 95% of the maximum opportunity. Murphy’s total remuneration for the period came to £4.7 million.
What’s in the new remuneration policy? The three-year policy approved at last year’s AGM has been updated to ensure it aligns to new strategic priorities under Murphy, who became chief executive in 2020. It removes the additional hurdle of a financial underpin from the annual bonus scheme, a simplification move that is in line with market practice and also potentially benefits more than just executive directors.
What happened at last year’s AGM? The annual remuneration report was supported with 91.8% of votes in favour. Shareholders approved the 2021 remuneration policy with 93.68% of votes being in favour.
What’s the view of voting agencies? Glass Lewis recommends support for the remuneration report and the binding vote on the pay policy. On the removal of the financial underpin, it said: “We acknowledge financial metrics continue to comprise a majority of the bonus and that the committee retains discretion to adjust outcomes as necessary.”
How’s the company doing on diversity? Following the AGM, the gender diversity split will be 64% male and 36% female. Board ethnicity will be 18% Black, Asian or minority ethnic.
International Airlines Group
When: 12 noon (CET), Thursday 16 June.
Where: Edificio Mutua Madrileña, Paseo de la Castellana, Madrid.
How to participate: The meeting will be held on the second date highlighted in the AGM notice. It will be possible to follow the meeting via the company’s website. Questions can be submitted in advance up until 11 June and voting instructions must be received by midnight (CET) on 15 June. AGM details and a guide for shareholders can be found here.
Who’s in the chair? Javier Ferrán has been in the role since June 2019. He also leads the board of Diageo.
How did the company do in 2021? Total revenues rose 8.3% to 8.45 billion euros (£7.19 billion) as the British Airways and Iberia owner recorded an operating loss of 2.7 billion euros (£2.3 billion), which compares with 4.4 billion euros (£3.74 billion) the year before.
How have shares performed? Down 11% to 142.5p (128.4p on Tuesday).
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How much is the boss paid? Luis Gallego’s £820,000 salary is unchanged after the normal January pay review was postponed until more information is known on the industry’s pandemic recovery later this year. In 2021, Gailego took a 10% pay cut to reflect the Covid impact and told the board he did not wish to be considered for any bonus award.
What’s changing in the remuneration policy? IAG wants to increase the potential opportunity under its long-term incentive scheme from 100% of salary to 150%. It argues that existing arrangements for its CEO are increasingly uncompetitive. Remuneration committee chair Alberto Terol said: “Recent evidence suggests that the rate of executive pay growth in mainland Europe and US has been faster than the UK with the opportunity gap to US packages being a particular retention concern.”
What’s the view of voting agencies? Glass Lewis recommends shareholders vote against the updated remuneration policy. It recognises the need to provide a competitive package to ensure retention and promote performance, but believes the proposed increase is misaligned with the stakeholder experience and deviates from best practice expectations on newly approved restricted share plans. The agency is in favour of the annual remuneration report.
What happened at last year’s AGM? The annual remuneration report was backed with 92.58% of votes in favour, while the remuneration policy got 93.53%.
How’s the company doing on diversity? Gender diversity of the board has been maintained at 42% in 2021. The company is also compliant with the Parker Review target for ethnic diversity on FTSE 100 boards.
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