Crunch time for the £50m fund fat cat
THE multi-million-pound earning bosses of investment giant Schroders, miner Anglo American and drugs group Shire are next on the shareholder spring hit list.
Following a staggering 59pc vote against the £14m pay of BP’s Bob Dudley on Thursday, the rebellion against the outrageous pay deals and controversial management decisions of a number of FTSE giants is set to shake boardrooms.
Next to come under the spotlight of investors is Michael Dobson, the chief executive of Schroders who has earned more than £50m in pay and perks over the past decade.
In March it was announced that Dobson would step down from this job – but would be handed the top role of chairman. This is a generally considered to be a breach of corporate good practice as it can lead to accusations that the independence of the chairman could be compromised.
Dobson, who earns around £8m, will also be paid £625,000 – almost double the £325,000 paid to predecessor Andrew Beeson.
There is already anger at Dobson’s excessive pay, but shareholders emboldended by the success of the BP pay vote look set to turn their fire on him at the fund group’s AGM later this month. Dobson has helped grow Schroders and tripled its assets under management to more than £300bn.
However, shareholder groups have advised against the appointment. The Institute of Directors said Dobson’s appointment raised concerns and that ‘strong performance is no excuse for ignoring the corporate governance rules.’
Schroders argues the code is guidance not strict rules and that individual circumstances should be taken into account. Any vote against Schroders’ decision to promote Dobson will serve as a public embarrassment to a fund manager that has itself attacked other corporates – that it owns stakes in – over governance issues.
Before the fund manager’s AGM though, Anglo American boss Mark Cutifani faces a vote over a pay deal. He was paid £3.4m for 2015 but ShareSoc estimates for this current year he could receive £6.3m if he meets targets, and up to £8.8m if he beats them.
Investors claim this deal is too high as the company suffered a loss of nearly £4bn and its dividend payments have been suspended. Around 20pc of investors could vote against the deal with a both advisory groups ShareSoc and ISS recommending it be rejected. The maximum possible bonus for each of the directors at Anglo, including Cutifani, is 210pc of base salary and a spokesman for Anglo said its pay policy resulted in Cutifani’s remuneration ‘decreasing substantially’ last year.
He said: ‘His bonus was reduced by 40pc, his variable pay was one fifth of the maximum achievable and his salary frozen, as it was for all our management team.’
Shire chief executive Flemming Ornskov is also on the hit list of angry shareholders.
His pay package of £14.6m is also expected to cause issues for some investors who deem it too high.
As other bosses come under fire, some are questioning the chair of BP’s pay committee Ann Dowling. Dowling, president of the Royal Academy of Engineering and a member of the government’s business board since 2014, has been on BP’s board since 2012.
Sir Vince Cable, former Business Secretary, said BP investors should now ‘demand heads’ over Dudley’s pay.
However, 98pc of shareholders voted to re-elect Dowling.
She said: ‘I take the feedback around this year’s report seriously and it raises some fundamental questions about our policy that we will consider over the coming months.’ She promised to review the pay policy and to ‘engage directly with major shareholders.’
On the same day as BP’s AGM, medical device maker Smith & Nephew suffered a pay revolt when 53pc of shareholders rejected a multi-million pound scheme for 60 senior executives.