Fat cats battered by shareholder spring
MILLIONS of shareholders turned on the bosses of some of the Footsie’s biggest names in anger over fat cat pay.
In one of the most significant results of the shareholder spring revolt so far, Glasgow-based engineering firm Weir Group lost a plan to bring in a lucrative share deal for its top executives.
More than 72pc of shareholders voted down the pay policy which could have seen bosses take home millions in share options regardless of how well the company performed.
While many of the pay revolts this year have not been binding, the one against Weir was, so it must go back to the drawing board to come up with a new bonus scheme for bosses.
Chief executive Keith Cochrane got £1.07m last year (down from £1.46m the previous year), and would have been awarded a payout worth 90pc of his salary regardless of performance but shareholders stopped it because it was a binding remuneration policy which is set every three years.
Weir chairman Charles Berry said the new policy had meant that although pay was not linked to ‘direct performance criteria’ it instead ‘closely aligned senior management incentives with shareholder interests, as their value is dependent on share price performance.’
He said Weir had extensively consulted shareholders and that he looked forward to further engagement with them on remuneration.
The FTSE 250 firm, which has been hit by the tumbling oil price and cutbacks, will now operate under the pay policy which was approved by shareholders in 2014 and which runs until next year.
Drug giant Shire was the other big name to suffer a significant revolt, at its annual meeting in Dublin. Some 49.5pc of shareholders voted against its pay report where chief executive Flemming Ørnskov was awarded a 25pc pay rise to nearly £15m for 2015.
Oliver Strawbridge, senior assistant company secretary, said it had engaged with major shareholders and acknowledged the protest.
Shire, which is buying Baxalta for £22bn, has said that under Ørnskov total shareholder return between April 2013 and December 2015 had risen 128pc and only 10pc of his award was fixed pay.
However many shareholder advisory groups have spoken out about the over-reliance on share awards.
Stefan Stern, director of campaign group The High Pay Centre, said: ‘Packages need to be simpler. Linking bonuses to the share price builds in volatility and completely unpredictable outcomes.
‘Most of us just get paid in cash to do a job. Why should CEOs be so different? Agree a figure, and if the boss does a bad job you can sack him or her.’
BP was the first company to provoke shareholder anger this month when chief executive Bob Dudley’s £13.9m pay was voted against by 59pc of shareholders.
A shareholder revolt was also expected at the annual meeting of Barclays yesterday. In total, 6.4pc voted against the report which recommended that chief executive Jes Staley, who joined in December, would get £1.2m in annual salary, £1.15m in other pay and annual bonuses worth a potential 80pc of his salary and long-term share awards worth a possible £1.44m.
The Barclays board was told by one investor that remuneration had got ‘wildly out of kilter’.
But Barclays chairman John McFarlane said: ‘We pay the units that perform and we do not pay the units that don’t perform and our bonuses are half what they used to be and have come down over the last 12 months.’