Imperial Brands chairman Mark Williamson said: “We have been actively engaging with shareholders for some time and while we received considerable support, it is clear that views have changed over that time and that the right course of action now is for the Board to withdraw the resolution.
“The Board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business and we will reengage with shareholders to reach a consensus on this important issue.“
Manifest’s analysis produced prior to the withdrawal of the resolution noted that the amended remuneration policy could have led to a significant upward ratchet in total pay and excessive levels of incentive pay. The policy was to have amended the long term incentive plan (LTIP). Manifest noted, however, that the LTIP awards could be released after only three years when a release after a minimum of five years would better reflect investor expectations.
The chief executive, Alison Cooper’s total remuneration in the year to September 2016 was £5.5m. Cooper received an increase in salary of 5.7% pay increase for 2016 to reach a total of £1.02m and it will rise by 3% in 2017 to £1.05m.
There has been a number of indications that institutional investors would be tougher in their votes on remuneration in 2017. Both the Investment Association and the Pensions and Lifetime Savings Association have strengthened their voting guidelines for their members and asset management giant, BlackRock, has written to companies outlining its intention to hold remuneration committee chairmen to account if pay at companies does not reflect performance and overall employee pay levels.
MPs continue Corporate Governance Inquiry
MPs on the Business, Energy and Industrial Strategy Committee continued their corporate governance inquiry this week. Baroness Sarah Hogg was among those answering questions. She argued that good corporate governance was not just a “nice to have” add on for companies.
She said: “Corporate governance is critical to the sustainability and to the performance of the company.”
Sir Philip Hampton who is leading the latest review to increase female participation in the board room and at executive level said he believed the UK’s overall corporate governance framework is good and is admired globally.
Shareholder engagement is poor say directors
Ken Olisa, deputy chairman at the Institute of Directors, said that in his experience shareholder engagement with companies was extremely poor. However, Andrew Ninian director of corporate governance engagement at the Investors Association said while there was an issue of quantity over quality of engagement investors wanted to engage with companies.