Morrisons has suffered a shareholder revolt after awarding its sacked former chief executive Dalton Philips a £1m bonus, with more than one in three votes cast against its remuneration policy.
More than a third of shareholders (35.6%) voted against the supermarket’s remuneration report, an unusually high number, according to proxy voting results revealed at its annual meeting on Thursday. The final tally, including a poll taken at the meeting at Morrison’s headquarters in Bradford, will be confirmed to the stock market in an announcement on Thursday evening.
Andy Higginson, the company’s chairman, told shareholders at the packed meeting that he felt the bonuses earned by directors including Philips and finance director Trevor Strain were “deserved”.
The company had made “very public commitments” on profit, cash generation and dividend payments, which they had met, he said. “Given the turmoil in the market, hitting any of those targets is to management’s credit.”
Higginson, a former Tesco executive who took over as Morrisons’ chairman earlier this year, said Philips had been paid the minimum amount to which he was contractually and legally entitled.
Philips, who left the company in January, was awarded his bonus in cash on top of his £850,000 salary, £213,000 in pension payments and £28,000 in benefits including a car allowance and private health insurance. He also was handed a further £1.1m payoff despite being sacked after a slump in sales and profits at the supermarket chain.
Normally, the company defers half of directors’ annual bonuses in shares for three years. The board, however, decided that strategy was not necessary as it was not trying to retain Philips’ services, which is cited as the main purpose of a deferral.
Higginson said shareholders had expressed concern about Philips’ termination and bonus payments. But he said he had been surprised by the wide range of other concerns raised including long-term incentive payments, the length of directors’ contracts and a suggestion that directors should not receive their bonus until after a five-year period.
“Views on best practice are increasingly fragmented. We will review it but knowing what to change may be difficult,” Higginson said.
He said companies needed to have reasonably long-term contracts for key directors or risked losing them to competitors at short notice. He said Morrisons could not move unilaterally to contracts of less than a year without risk. “If shareholders want short notice-periods then they will have to be imposed not left to the market,” he told the meeting attended by more than 200 people.
Higginson and the supermarket’s chief executive, David Potts, another former Tesco executive, won support from Sir Ken Morrison, the retailer’s life president, who said the new team should be given “breathing space. It’s a big job to turn this company’s fortunes around,” he said.
Morrison suggested the board would benefit from having more retailers on the board and that he had suggested a number of former staff who might be of use.
His comments were a change in tone from last year’s shareholder meeting, when he launched a tirade against the supermarket’s leadership, describing Philips’ strategy as “bullshit” and warning that the business founded by his father had been ruined.
Higginson and Potts welcomed the veteran retailer’s backing, saying Morrison was “a legend in this industry and within the business”.
In a sign of new relations, both executives have walked stores with Morrison, 83, who built his father’s business into a national chain. “We had the idea of building bridges which have been pulled down in recent years,” said Higginson, adding that Morrison was a “fantastically able observer and adviser to the business but David Potts is the chief executive and he will make the decisions”.
On Wednesday, Morrisons clung on to its place in the FTSE 100 after industry data suggested it had seen its first quarter of sales growth since December 2013.
guardian.co.uk © Guardian News and Media Limited 2010