THE INVISIBLE FTSE FAT CATS Revealed: The below-the-radar Nurofen boss whose thumping £14.6m ANNUAL salary is giving his shareholders a headache
RAKESH KAPOOR prefers to keep a low profile. But you will undoubtedly have bought products made by his £9.9billion company RB, with Dettol, Vanish and Nurofen among its brands.
His abilities are not in doubt: the firm’s value on the London Stock Exchange has doubled since he took over as chief executive. Last year, he took home £14.6million, making him one of Britain’s best paid men. But there is also growing unease among his shareholders over his fortune.
Almost a quarter of shareholders at his company voted last year to reject a plan that has helped reward him with £53million over three years.
More strikingly, he is one of the few FTSE 100 bosses who have faced a shareholder revolt of more than 20 per cent, not once but twice in the past four years – a feat that would single him out under new Government plans to shame bosses over excessive pay.
The revelations come as part of an investigation by The Mail on Sunday into excessive boardroom pay. Among the top 20 highest earners are many names who will be unfamiliar to the public despite their vast wealth.
Last week, Theresa May announced plans to clamp down on fat cat pay by drawing up a list of bosses at firms where more than 20 per cent of share- holders reject boardroom pay plans. Companies publicly listed on the London Stock Exchange will also be obliged to publish the pay ratio between their chief executive and their average British worker.
‘These stratospheric sums of money in one year are unacceptable,’ said Beau O’Sullivan, of ShareAction, which works with City fund managers to promote responsible investment.
‘Millions of people on modest incomes are now paying into pension pots that are invested in companies like RB in the hope of a half-decent retirement. As pension savers, we own these companies. Corporate executives should show more sensitivity around their use of shareholders’ funds.’
It is tempting to wonder what Kapoor and his wife Ritu do with their vast wealth. Modestly, his interests are said to include cricket and bridge. But his address is listed as a plush block on London’s Grosvenor Square, where apartments can cost £16million.
Kapoor’s bonanza would pay for more than 1,000 workers on a £14,000 annual salary. More shocking, last year’s pay was half what RB – formerly known as Reckitt Benckiser – had planned to reward him in salary and various bonus payments.
It shelved a promise to pay him an extra £14million after it was forced to face up to a crisis in South Korea – the deaths of around 100 people were linked to the firm’s Oxy humidifier disinfectant in the decade before Kapoor took charge.
During a public meeting in Seoul in May last year, company director Ataur Safdar, responsible for the business in Korea and Japan, faced humiliation when he was slapped by an angry protester during an event that marked the first public apology for the deaths. The company has also set aside £300million to compensate those affected. More than 5,000 cases have already been reported, many with lung complaints relating to the effects of the chemicals in its product.
Meanwhile, the company was fined in Australia last December for misleading claims about the effectiveness of its Nurofen products for treating specific pains. It was forced to pay £3.8 million when a court decided its painkillers advertised as remedies for back pain, headaches, migraines or period pains were no better than the normal variety, yet often cost more to buy. It is perhaps not surprising that Kapoor is so well rewarded among FTSE bosses. His predecessor Bart Becht was paid a record-breaking £90million in 2009, thought to be the highest ever annual pay packet for a chief executive at a stock market-listed firm. Becht made the company one of the best performing firms in the FTSE 100 during his 12 years in charge. Since his arrival, Kapoor has doubled the company’s value to £53 billion. An RB spokesman said: ‘RB’s remuneration report was approved by more than 87 per cent of shareholders this year, reflecting changes made by the remuneration committee. ‘In addition, the committee reduced the CEO long-term incentive for this year and has committed to further reduction next year. With the support and feedback of investors, the company continues to evolve its remuneration structure while retaining its core principles of pay for performance, alignment with shareholders and simplicity.’
The High Pay Centre said last month that the average FTSE 100 chief earns £4.5million a year, a figure clearly dwarfed by many of the highest paid bosses.
The corporate watchdog said it is increasingly concerned over the widening gulf between the boardroom and the shopfloor. It would take employees 160 years to earn the average FTSE 100 chief executive salary.
Amazingly, Kapoor still only makes it to fourth on the list of the most highly paid.
At housebuilder Berkeley, six members of the executive board, including chief executive Rob Perrins, are set to share more
than £92million – one of the highest board payouts ever. Perrins, Britain’s second highest paid chief after Sir Martin Sorrell, received £28million last year.
Despite that eye-watering salary, he would have ducked under the 20 per cent benchmark set by the Prime Minister because about 15 per cent of his shareholders voted against the company pay plans in 2015. Even so, the company acknowledges that that number is still too many. Berkeley has responded to unrest by capping bonuses and putting a new incentive plan to a vote earlier this year. The plan was passed at a meeting in February but bosses will face another vote when shareholders gather for the company’s annual meeting on Wednesday.
Eight of the FTSE 100’s 20 highest paid bosses would have found themselves on the Government’s list of shame at some point over the past four years, according to Mail on Sunday research going back to 2014.
Other bosses with marks against them include Dublin-based Albert Manifold, who runs building materials group CRH – he has received €19.6million (£17million) over the past three years, half of that last year in a bumper year. In 2016, 41 per cent of his shareholders sought to reject his pay plan.
Also based in Dublin, chief executive Flemming Ornskov, at pharmaceutical company Shire, was subjected to an even bigger revolt last year when half of shareholders rejected his pay plan. The company defended the Dane’s pay by saying he was so good at his job that it needed to pay him well to stop him being poached by a rival.
The Government has faced complaints its new plan to name and shame executives is too lenient.
Perhaps critics fear that Britain’s bosses are now so far removed from reality that they have no shame?