HBC investors challenge exec’s pay

Hudson’s Bay Company faced a fight from some of its most prominent investors Tuesday over its decision to award executives with multi-million-dollar pay packages despite two years of weak sales and sizable losses for the retailer.

The Ontario Teachers’ Pension Plan, British Columbia Investment Management Corp. and the California Public Employees’ Retirement System (CalPERS) said they voted against the firm’s remuneration practices that include a $54.8-million pay package for the retailer’s executive chairman Richard Baker.

The “say on pay” vote — a nonbinding motion aimed at collecting shareholder feedback — took place at the company’s annual general meeting in Toronto and ended in the executives’ favour.

However, CalPERS spokesperson Mike Osborn said in an email “we don’t feel the company sufficiently linked pay with performance” and Teachers’ said in its proxy vote statement that “in this case, we do not feel that the awards have been sufficiently justified.”

Baker’s compensation includes more than $37 million in sharebased awards and more than $16.6 million in option-based awards. The company’s other executives are due to earn totals between $1.4 million and $9.4 million, according to HBC’s information circular.

After the vote passed, one shareholder criticized Baker’s remuneration saying, “It is one thing to award a package. It is another to accept it and so I think accepting it reflects on (Baker)’s character.”

The shareholder called on Baker to address the issue, to which Baker replied “we appreciate your question. Thank you.”

The majority of other stakeholders at the meeting focused on the value of the company ’s real estate, which at least one activist investor has previously pushed the company to think strategically about, given the retailer’s rocky recent performance.

In October, Jonathan Litt, chief investment officer and founder of activist investor Land & Buildings Investment Management, said the company is really a real estate company, not a retailer, that has failed to outline a plan to unlock the “substantial real estate value trapped in the company.”

On Tuesday, one shareholder echoed Litt’s sentiments, suggesting the company build condos above its flagship Toronto HBC and Saks Fifth Avenue location “while real estate is hot.”

Helena Foulkes, the company’s chief executive, said the company was looking at selling certain properties, but was not in a hurry.