Dissent on pay continues at UK AGMs

Investors showed their concerns over executive pay at more AGMs this week. The largest rebellion was at bookmaker Ladbrokes which faced a 42% vote against its remuneration report – this was just above the 40% vote against received last year.

Ladbrokes has agreed to merge with another betting company, Coral, and stated in its annual report that it would undertake a review of the remuneration policy of the combined company once the deal is completed. Manifest’s analysis of Ladbrokes’ remuneration had given the company a grade D. Manifest considered that the pay policy failed to establish a reasonable degree of alignment between executive remuneration and company strategy. Total remuneration awarded and received is above expectations considering the size and performance of the company Manifest stated – Jim Mullen, chief executive, who was appointed in May last year received total remuneration for 2015 of £534,370.

There were also issues raised about the pay off made last year to the former chief executive, Richard Glynn, and the pay off agreed with the former finance director, Ian Bull, who left the company in February this year and who will be replaced by Coral’s chief financial officer once the deal is agreed. The company noted the high level of dissent last year in its annual report which related to Glynn’s termination arrangements. It said these had been agreed when Glynn was recruited and accepted those terms were no longer best practice.

Following this year’s vote the company said, “Ladbrokes understands the concerns expressed by some shareholders towards the termination arrangement with Ian Bull. The Board is very aware of shareholder observations and these will play a key part in the board’s thinking as remuneration is considered for the business going forward and the potential merger with Coral.”

Household and healthcare manufacturer and supplier, Reckitt Benckiser had a 23% vote against its remuneration policy and a 18% vote against its remuneration report. Manifest graded the company’s remuneration as E due to concerns about its incentive plans and potentially excessive bonus levels and salary levels. The chief executive, Rakesh Kapoor’s, reported total remuneration reached £23m last year up from £11m in 2014.

The company has consistently had a high level level of dissent in respect of its remuneration – in 2014 it had a 22% vote against its policy and a 43% vote against its report. Following these votes Reckitt Benckiser had engaged with investors and stated in its 2015 annual report that the remuneration committee believed, “our remuneration packages are simple, reinforce our remuneration philosophy and drive a strong alignment between executives and the interests of our shareholders”. The company said it continued to have dialogue with shareholders and it believed it had taken into account their feedback with the changes it had proposed this year.

Building and infrastructure company, Carillion, had a 19% vote against its remuneration report. Manifest graded Cariliion C and said there was a failure to align executive pay and company strategy. There had also been significant salary increases for the chief executive, Richard Howson, between 2014 and 2016. Howson’s salary rose by 8% last year to £610,000. The company stated in its annual report that it had consulted with shareholders about a two stage increase in Howson’s salary that was now completed and last year it has received 99% vote in favour of its remuneration report.

Pharmaceuticals company, GlaxoSmithKline, noted its 15% vote against its remuneration report and said it would be engaging with shareholders in advance of the remuneration policy vote next year. The company’s remuneration was graded D by Manifest – its analysis noted a failure to align executive pay and company strategy and pay levels could be regarded as excessive. The chief executive, Andrew Whitty’s total remuneration reached £6.6m last year compared with £3.9m in 2014.

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