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Big protest vote at Tomkins AGM

At today’s AGM of Tomkins plc (FTSE 250 constituent), only 38.8% of shareholders voted in favour of the remuneration report resolution. Measured in terms of dissent (61.2%), the rebellion against the remuneration report ranks just outside the top ten all-time for such resolutions, however the resolution did manage to pass. The dissent was split between against votes (24.63%) and abstentions (36.57%), allowing the resolution to achieve the requisite majority.

In Manifest’s meeting business report, we noted a 38% salary increase for the CEO, James Nicol. He received a bonus of £521k and an LTIP award with a face value of £2.7m. These were awarded despite a notable downturn in Company performance when measured using a number of the key performance indicators identified by the company.  Amongst the other noted remuneration policy concerns were the potentially unlimited bonus and a generous defined benefit pension contribution entitlement for Nicol equivalent to 37.5% of salary. In the event of early termination of his contract, Nicol would be entitled to a pro-rata bonus (not necessarily contentious), plus a further amount for the bonus year following the bonus year in which the date of termination falls equal to 50% of fixed salary for that bonus year. This guaranteed bonus element of his termination clause runs contrary to best practice.

The protest vote was the second highest in the FTSE 250 during 2009, second only to Bellway – whose remuneration report was defeated in January. Full details of the voting on the resolution is available on Manifest VoteWatch ™.

What do you think?