FTSE bosses braced for showdown on fat cat pay deals
Food boss Tim Steiner’s £100m bonus package stokes fury as investor revolts reach fever pitch
ANGER at the ‘ extraordinary’ bonuses being dished out to Britain’s top bosses is set to boil over at a string of annual meetings at firms including Ocado, Melrose and Persimmon over the next fortnight.
Investors have been told to reject executive pay proposals worth tens of millions of pounds at high-tech delivery firm Ocado, controversial engineering group Melrose and Persimmon, the construction firm that became i nfamous for the £75 million bonus it paid its chief executive over two years.
The backlash at blue-chip company excess comes as new figures seen by The Mail on Sunday show that investor revolts against pay have been growing across the FTSE 100 and FTSE 250 in 2019.
According to Proxy Insight, the average level of votes approving executive pay has fallen nearly three percentage points to 92 per cent since 2016. It has plunged thanks to sizeable votes against pay at tech giant Micro Focus, banking group CYBG and gold miner Centamin – despite improvements in approval voting at many firms.
Proxy Insight managing director Nick Dawson said investors ‘are finally losing their patience’ with mind-bogglingly large incentives, which seem to be on the rise.
Ocado chief executive and cofounder Tim Steiner will receive £ 100 million if he can triple the company’s share price over the next five years. That does not include separate incentive bonuses and pay.
Shareholder advisory body ISS said Steiner’s reward, called the ‘Value Creation Plan’ and which investors will be asked to support on Wednesday, could ‘ transfer a significant equity value’ to him even though he is ‘already a significant shareholder in the business’. His 3.4 per cent stake is valued at around £340 million. Steiner sold shares last year, reputedly to cover the cost of his divorce. He now lives with girlfriend and f ormer l i ngerie model Patrycja Pyka and has bought a £ 2 5 mi l l i o n superyacht Silver Fox.
Melrose, the corporate raider whose four top executives collectively took home nearly £ 170 million l ast year, is also in the firing line. It controversially bought engineer GKN last year and could face more opprobrium at its investor meeting on May 9 after advisory body Glass Lewis told investors to reject its pay report and oust the remuneration committee, which includes company chairman Justin Dowley, for failing to address concerns over last year’s package.
Glass Lewis said it had ‘severe reservations’ because Melrose had given an ‘inadequate response to prior year dissent’ over the awards.
But ISS has told investors to vote in favour of Melrose pay after chief executive Simon Peckham’s total package fell from £42.8 million to £1 million this year. Melrose and Ocado declined to comment.
Luke Hildyard, executive director at corporate watchdog The High Pay Centre, said the ‘sums of money involved’ were ‘extraordinary’, adding: ‘Pay increases this year aren’t expected to be as dramatic as they have been. But there are still a lot of cases where executives are being given t hese massive i ncentive schemes so they and a few investors can rake in all the cash from the success of the operation.’
He said giving executives such as Steiner, who has previously sold a large chunk of his stake, large tranches of shares as incentives was ‘a question of proportionality’. ‘When you sell out your stock to investors, that is when you transfer the risk. But then being paid in this way seems a bit like wanting to have your cake and eat it,’ he said.
Persimmon chief executive Jeff Fairburn resigned after last year’s revolt over his £75 million bonus. His replacement, Dave Jenkinson, has been awarded £25 million in pay and bonus. The firm hosts its investors on Wednesday, and shareholder group Pirc has recommended a vote against the pay report, citing concerns over the controversial bonus scheme. Persimmon said it understood ‘ the need for pay restraint and spent 2018 working to ensure Persimmon’s future remuneration is clearly aligned with best practice’.
Barclays boss Jes Staley, whose pay is worth £3.4 million, also faces a revolt this week. ISS has urged investors to vote against executive pay to register concerns over a long- running probe into Staley’s pursuit of a whistleblower. A spokesman said t he bank had adjusted his pay in recognition of the inquiry, for which he was fined £642,000 by regulators.
This week could al so prove embarrassing for City fund manager Schroders, which holds its annual meeting on Thursday. Both Glass Lewis and ISS have recommended votes against its executive pay. In its report, Glass Lewis noted that chief executive Peter Harrison had received bonuses in excess of £5 million each year since he was appointed in April 2016.
Schroders said: ‘We have a clear and thorough process which we have followed rigorously and which has served the firm and all its stakeholders well over many years.’ Building society bosses reap bonanza – Page 108