From supermarket group Morrisons to mining giant Rio Tinto, investors have voted against boardroom payouts in the pandemic
Last modified on Sat 26 Jun 2021 11.13 EDT
The personal and financial sacrifices of many during the pandemic have cast a harsh light on executive pay excesses. Shareholders have delivered stinging rebukes to some of the UK’s best-known companies for failing to match the national mood.
The High Pay Centre, a campaign group, thinks big pay packets in the time of coronavirus could result in political pressure to give worker representatives a say on bosses’ pay.
JD Sports will be the latest company in the investor firing line on Thursday, after awarding bonuses worth almost £6m to executive chairman Peter Cowgill despite receiving about £100m in government support.
Here are some of the companies drawing investors’ ire over bumper executive pay packets this year.
Morrisons
The supermarket group used its “discretion” to award bosses big bonuses despite missing profit targets. Last month 70% of shareholders voted against its pay report, the second-biggest rebuke since 2017, when the Investment Association – which represents UK investment managers – first started tracking pay votes.
David Potts, Morrisons’ chief executive, collected his full £1.7m bonus, bringing his total pay packet to £4.2m, while two other top executives also had increased bonuses after the remuneration committee decided to ignore costs related to the pandemic.
The shareholders’ vote was only advisory, and Morrisons must now merely consult its investors. The grocer could avoid further scrutiny if it succumbs to a takeover bid from US private equity firm Clayton, Dubilier & Rice. Morrisons has rejected an initial offer of £5.5bn to take it private.
Foxtons
The estate agent eagerly tapped the government’s furlough scheme, taking £7m in state aid to support workers’ salaries. That helped it to a loss before tax of only £1.4m in 2020, compared with a loss of £8.8m before the pandemic.
Foxtons’ decision to press ahead with the award of a near-£1m bonus to its chief executive, Nic Budden, in spite of the loss and the government support, did not please investors. Glass Lewis, a shareholder advisory group, said there was no reason not to cut the bonus payments to zero. More than a third of shareholders (39%) voted against the company’s remuneration report in protest.
AstraZeneca
The Anglo-Swedish drugmaker has gained significant goodwill globally by agreeing to manufacture its Covid-19 vaccine, developed at Oxford University, at cost – unlike many of its rivals. Yet it has already lost some of that reputational gain by setting lucrative pay incentives for its chief executive, Pascal Soriot.
AstraZeneca significantly boosted Soriot’s potential pay packet. He will be eligible for bonuses and share awards worth up to 900% (up from 750%) of a base salary already worth £1.3m. The company won the pay vote in May, but only 60% of investors backed it in the binding poll.
WH Smith
In January the FTSE 250 retailer delayed a £25,000 pay rise given in July 2020 to its chief executive, Carl Cowling, after investors expressed their anger – 33% voted against WH Smith’s remuneration report, and another 9% abstained.
The company said that it thought Cowling deserved the pay rise, but that it would not be implemented until at least September this year, amid concerns over the top-up when workers had been furloughed and the value of its shares had fallen. WH Smith said last week that it would consult investors when setting its pay policy for next year.
Cineworld
Cinemas around the world have had a difficult pandemic, with enforced closures and a long drought of big films. Cineworld, the UK’s largest cinema chain and second largest globally, duly reported losses of $3bn for 2020.
Many zero-hours staff were left without pay when cinemas closed in the UK but Cineworld executives could be in line for bumper payouts.
Share awards allocated to chief executive Mooky Greidinger and his brother and deputy, Israel, would be worth as much as £200m if the share price approaches its pre-pandemic level. Just over 30% of investors voted against the company’s pay policy last month in response.
Informa
The exhibitions and business publishing group suffered a major pay revolt this month when nearly two-thirds of voting shareholders rejected its latest executive bonus scheme, which had far easier performance targets than previously. Stephen Davidson, chairman of the company’s remuneration committee, was nearly booted off the board in a protest vote too. Although the vote was advisory, Informa said it would draw up a new pay plan for next year’s meeting.
Rio Tinto
The mining group performed well financially during 2020, making profits of nearly $10bn. However, it was rocked by a scandal of historic proportions: the knowing destruction of sacred 46,000-year-old rock shelters at Juukan Gorge in Western Australia.
Former chief executive Jean-Sébastien Jacques announced his resignation after the outcry refused to die down. However, investors still rejected Rio Tinto’s pay report after it emerged that Jacques’s total pay for the year had grown to £7.2m – despite the loss of a few million in bonuses in recognition of failures. More than 60% objected.
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