AGM alert: Centrica, Kingfisher, Fevertree Drinks

Chris O’Shea’s £8.2 million pay package for running Centrica (LSE:CNA) is likely to be the hottest AGM topic when shareholders of the British Gas business gather in Glasgow next month.

His headline total was fuelled by the company’s strong share price performance, which accounted for two-thirds of the £5.9 million generated from long-term incentives.

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The sum is the highest received by Centrica’s chief executive in the past decade and compares with 2023’s award of £4.5 million, which O’Shea admitted in January was hard to justify.

Other forthcoming AGMs include the meetings of B&Q owner Kingfisher (LSE:KGF) and AIM-listed Fevertree Drinks (LSE:FEVR), where boss Tim Warrillow has received a 28% pay rise as part of an overhaul of the company’s remuneration structure.

Centrica

When: 10.30am, Wednesday 5 June.

Where: Hilton Glasgow, 1 William Street, Glasgow G3 8HT.

How to participate: The choice of Glasgow for the AGM reflects the company’s connection to the city as an important base for its Scottish Gas energy services business. Shareholders can join the meeting electronically via a live webcast. Proxy voting instructions should be returned no later than 10.30am, Monday 3 June. More AGM details can be found here. 

How did the company do in 2023?  Adjusted operating profit of £2.75 billion fell from £3.3 billion in 2022, reflecting reduced prices and volatility in Centrica’s Optimisation energy trading arm and the introduction of the Electricity Generator Levy in the nuclear business. Retail profits rose to £799 million from £94 million the year before, driven by a return to profitability in British Gas Services & Solutions. The earnings per share performance of 33.4p compared with 34.9p, while free cash flow fell slightly to £2.2 billion. A final dividend of 2.67p is due to be paid on 11 July, resulting in a 1p increase in the total for the year at 4p a share. Centrica also announced a £450 million extension of its buyback programme.

Who’s in the chair? Scott Wheway, the former chief executive of Best Buy Europe and MD of Boots the Chemist, was appointed in March 2020. He joined the Centrica board in 2016.

How have shares performed? Up 46% to 140.65p in 2023 (146.4p on Thursday).

How much is the boss paid? Chris O’Shea’s salary increased in April by 4.9% to £855,000. His 2023 total remuneration of pay, bonus and long-term incentives amounted to £8.2 million compared with £4.5 million in 2022. Share price growth accounted for two-thirds of the £5.9 million generated from long-term incentives. These vested at 85% of the maximum and will be subject to a two-year holding period. The annual bonus contributed £1.4 million in cash and deferred shares, based on 87.5% of the maximum.

How were the awards determined? Earnings of 33.4p resulted in the maximum outturn under this part of the bonus scheme, even though the target was toughened during the year to reflect improved market conditions. The majority of customer, staff and financial targets were met in full, including on operating profits and free cash flow. However, the outturn of 185% was reduced to 175% in order to reflect the findings of a national newspaper investigation into the fitting of prepayment meters by a third-party contractor working for British Gas. Total shareholder return over the three years of the long-term incentive scheme was 267.4%, which compared to 47.1% for the upper quartile of the FTSE 100. Performance against the financial measures was near to maximum vesting and around the target for non-financial metrics.

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What’s the company say about his level of remuneration? The remuneration committee points out that O’Shea’s salary and target total direct compensation is below the median benchmark for similar roles in the FTSE 100. It adds that his total has the potential to be lower over the next two years as the company has moved to a Restricted Share Plan, where the maximum awards are discounted by 50% compared to the 2021 long-term incentive plan.

How did last year’s AGM go? The annual remuneration report was approved with 93.19% of votes in favour.

How’s the company doing on diversity? At the end of 2023, the company complied with the targets outlined in the FTSE Women Leaders Review and the Parker Review to have over 40% female representation on the board and at least one director from a minority ethnic background. However, it does not currently have a female in any of the senior roles. 

Kingfisher

When: 2pm, Thursday 20 June.

Where: No.11 Cavendish Square, London W1G 0AN.

How to participate: This will be an in-person meeting. Voting instructions and questions in advance of the meeting should be submitted by 2pm, Tuesday 18 June. More AGM details can be found here.

Who’s in the chair? Former InterContinental Hotels boss Andrew Cosslett is to step down after the AGM, having held the role for seven years. He will be succeeded by Claudia Arney, who has been a non-executive director of the company since November 2018. She began her career at McKinsey & Company, before holding roles at Pearson, Goldman Sachs and HM Treasury. 

How did the company do in the year to 31 January? Total sales of £13 billion fell by 0.6%, a decline of 3.1% on a like-for-like basis after positive trading for B&Q and Screwfix in the UK was offset by the impact of more challenging trading conditions in France and Poland. Adjusted pre-tax profits fell 25.1% to £568 million and earnings per share by 26.4% to 21.9p a share. The total dividend of 12.4p a share is unchanged, including 8.6p due to be paid on 25 June.

How have shares performed? Down 21% at 220.4p (261.6p on Thursday).

How much is the boss paid? The salary of Thierry Garnier has increased for this year by 4% to £917,830. His total remuneration for last year amounted to £5.07 million, which included £364,900 after the annual bonus scheme paid 20.84% of the maximum. Above threshold performance was achieved for like-for-like sales but the target for adjusted pre-tax profit was not met. The biggest contribution to his overall figure came from shares granted in 2019 under the company’s Delivering Value Incentive scheme, which consolidated three years’ worth of long-term share awards and also included shares that formed part of Garnier’s recruitment package. Performance was measured across a five-year time horizon over two periods, with the first covering February 2019 to January 2022 resulting in a formulaic outturn of 79.6% and the second 0%. This resulted in 39.8% of the maximum, equivalent to £3.2 million. The 100% vesting of 2021 Alignment Shares, which were assessed against the underpins of net debt to earnings and dividend cover above 1.75 times, contributed £468,700.

How did last year’s AGM go? The annual remuneration report was approved with 95.18% of votes in favour. 

How’s the company doing on diversity? The gender split of the board at the end of January was 44% female, including one senior role. One director is from an ethnic minority background.

Fevertree Drinks

When: 11am, Thursday 6 June.

Where: The company’s offices, 186-188 Shepherds Bush Road, W6 7NL

How to participate: Proxy voting instructions should be returned no later than 11am, Tuesday 4 June. More AGM details can be found here. As an AIM-listed company, the vote on the company’s remuneration disclosures is on an advisory basis.

Who’s in the chair? Domenic de Lorenzo joined the board in 2018 and replaced Bill Ronald as chair at 2023’s AGM. He spent two decades at former FTSE 100 beverage company SABMiller.

How did the company do in 2023? Revenues rose 6% to £364.4 million, with the United States now the largest trading region after growth of 22%. The gross margin fell 240 basis points to 32.1% but with an improved trend in the second half. Earnings per share fell by 38% to 13.18p. A dividend of 10.90p is due to be paid on 21 June, resulting in a 2% increase in the total for the year to 16.64p.

How have shares performed? Up 2% at 1,049p (1,195p on Thursday).

How much is the boss paid? Tim Warrillow’s overall remuneration for 2023 amounted to £619,000, down from £1.03 million the year before. It included an annual bonus of £133,000, equivalent to 20% of the maximum opportunity after a payout under the plan’s strategic and ESG elements. There was no award in respect of financial performance for 2023. The core and additional long-term incentive shares granted in 2021 lapsed in full.

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How is the company’s remuneration changing? Fevertree has announced a 28% increase in Warrillow’s base salary for this year to £565,000 and a 35% increase to £385,000 for chief financial officer Andy Branchflower. The pay rises will be offset by the lowering of the long-term incentive scheme maximum opportunity from 450% to 300% of salary. As a result, there is no material increase in total compensation at the maximum level. The new structure takes into account the size, complexity and increasingly global nature of the business, as well as the experience and skills of the executive directors. It also marks a change from Fevertree’s IPO in November 2014, when lower base salaries and higher long-term incentive opportunities were used in order to reflect the high growth nature of the business.

How’s the company doing on diversity? Two changes during 2023 have left the board at 25% female representation.