Shareholder Spring claims new casualties
THE SHAREHOLDER Spring continued to blossom yesterday as investors rejected another executive pay settlement.
Pendragon, Britain’s leading car dealer, was forced to back down on plans to increase its directors’ pay packets after 67 per cent of shareholders voted against its remuneration report.
Meanwhile almost half of Trinity Mirror investors voted against the proposed pay deal at the newspaper group, even though chief executive Sly Bailey quit last week.
Shares in Pendragon – which has around 250 showrooms – have dropped 18 per cent in the past year.
Despite this the company had proposed to increase the potential bonus pot for executives from 100 per cent of basic salary to 150 per cent “to provide a more market-competitive bonus”.
The lack of performance-related conditions raised the ire of leading investors, as well as advisory body Pirc which recommended shareholders should vote against the settlement..
“I would like, on behalf of the board, to take this opportunity to reassure all shareholders that we have taken their objections about short-term and long-term incentive plans seriously,” said chairman Mike Davies, who was further embarrassed when 26 per cent of investors voted against his re-election to the board.
Elsewhere Trinity Mirror’s AGM saw a 46 per cent vote against the remuneration package, despite Bailey’s attempt to head off the rebellion over her pay package by stepping down.
Bailey received almost £1.8m in cash and share awards last year even though the company’s operating profit fell 15 per cent to £104m despite cost cuts that included axing jobs and freezing salaries.
In the decade since shareholders gained the right to an advisory vote on executive pay only a handful of firms have suffered the ignominy of having pay packages rejected.
But Pendragon is the second major London-listed company to suffer this fate in the past fortnight as long-running corporate governance campaigns by activist pension funds boil over into the realm of mainstream investors.
Aviva chief executive Andrew Moss was forced to resign earlier this week when 59 per cent of shareholders voted against proposals to increase his pay packet despite sluggish share performance at the insurer.
On Tuesday Ralph Topping, chief executive at bookmaker William Hill, survived by the narrowest of margins after a shareholder vote on his £1.2m “retention bonus” fell to 50.1 per cent in his favour.
Centrica, which owns British Gas, holds its AGM later today and is expecting a small rebellion against pay packages, while advertising giant WPP is understood to be wooing shareholders in the hope of avoiding an embarrassing defeat on chief executive Sir Martin Sorrell’s 30 per cent pay rise.
Ceramics firm Cookson and gambling company 888 Online are also expected to face pay protests from angry shareholders next week.
Wednesday’s Queen’s Speech included a government pledge to introduce a binding vote on pay deals, raising the prospect of even more rebellions in the future.