FTSE companies prepare for executive pay showdowns

Johnny Cash

Boardroom executives of at least five major companies are braced for rows over pay and succession planning when they hold their annual general meetings, at a time of renewed shareholder focus on directors’ pay .

More than 25 companies have their AGMs scheduled for Thursday, although before they begin the focus is on FTSE 100 companies – such as Shire Pharmaceuticals, building materials business CRH, Barclays and fund manager Schroders – and FTSE 250 engineer Weir.

The votes on pay at Shire Pharmaceuticals, CRH and Weir are expected to be tight, especially at Shire – where chief executive Flemming Ørnskov is receiving a 25% rise in his salary to $1.7m (£1.2m).

This year’s AGM season has already broken records, with two FTSE 100 companies – BP and Smith & Nephew – both receiving no votes over pay on the same day – and revolts over pay are also expected on Thursday.

Royal London Asset Management intends to vote against the pay deal for Ørnskov and abstain from supporting the non-executive who chairs the remuneration committee. Advisory body Institutional Shareholder Services (ISS) is aiding a vote against the remuneration report, pointing to the impact that the large rise in Ørnskov’s salary will have on his total pay as bonuses are set a multiple of base pay.

Some investors at Shire are ready to back the pay deal because of competition in the pharma industry while the company said Ørnskov’s pay is “firmly aligned” with shareholder interests.

CRH is also in focus over pay rises – justified by the Dublin-based company on the grounds it is a bigger company as it has made acquisitions – for senior staff. The salary of chief executive Albert Manifold has risen to €1.4m from €1.29m.

CRH is holding two votes on pay – the remuneration report that covers 2015 and the policy for the next three years, which ISS recommends opposing.

While the annual vote on remuneration is advisory, the one on the policy is binding – although in CRH’s case will not be because it is based in Ireland.

Glasgow engineer Weir also has two votes on pay, and the policy vote will be scrutinised because it includes a share award which is not linked to performance. Weir argues it has used this policy for US directors and said the pay for the chief executive was down last year.

At Barclays, executive pay may be a flash point because new chief executive Jes Staley has cut the dividend for this year and next. When the bank published its first quarter results on Wednesday, Staley said bonuses would be cut despite the better than expected performance in Barclays’ investment bank.

Some shareholders are frustrated at boardroom changes at Schroders which is elevating its chief executive Michael Dobson to chairman. Such a move is unusually frowned upon although 47% of the shares are owned by the controlling family.

Other companies holding their AGMs on Thursday include housebuilder Taylor Wimpey and Tullow Oil.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for theguardian.com on Thursday 28th April 2016 06.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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