AGM alert: HSBC, BAE Systems, GSK, Taylor Wimpey

New and more lucrative pay deals for running BAE Systems (LSE:BA.), GSK (LSE:GSK) and HSBC Holdings (LSE:HSBA) will be in the spotlight when the three FTSE 100 heavyweights host their AGMs at the start of May.

BAE is renewing its remuneration policy a year early in an effort to ensure that it does not lose key executives at a time of heightened geopolitical uncertainty.

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The new “golden handcuffs” package increases Charles Woodburn’s maximum long-term incentive grant of shares from 370% to 500% of base pay.

The opportunity for GSK boss Emma Walmsley is also increasing in order to address concerns the current level is more consistent with ‘number 2’ roles in the company’s peer group.

Meanwhile, an overhaul by HSBC will position the chief executive’s maximum opportunity at £15.1 million as it looks to link a higher proportion of pay to the lender’s performance.

HSBC

When: 10am, Friday 2 May.

Where: On the Lumi online platform and at the broadcast venue, the InterContinental London O2, 1 Waterview Drive, London SE10 0TW.

How to participate: The company believes shareholders will have the best experience by participating online. It points out that a digitally-enabled AGM ensures accessibility and engagement for the company’s geographically diverse shareholder base, including those located outside the UK. Shareholders will be able to attend and vote electronically and to ask questions in real time should they wish to do so. More AGM details can be found here.

Who’s in the chair? Former Prudential chief executive Mark Tucker has held the role since October 2017.

How did the company do in 2024? Constant currency profit excluding notable items increased by $1.4 billion to $34.1 billion. This was driven by revenues growth in Wealth and Personal Banking and Global Banking and Markets, which offset a rise in operating expenses in line with the cost growth target. Revenues of $65.9 billion were stable compared to 2023 and return on tangible equity, a key measure, unchanged at 14.6%. A fourth quarterly dividend of 36 US cents a share is due to be paid on 25 April, increasing the total for 2024 to 87 US cents a share. This includes June’s special dividend of 21 US cents following the sale of HSBC Bank Canada. It also announced three share buy-backs worth $9 billion in relation to 2024.

How have shares performed? Up 24% to 785.3p (806.9p on Thursday).

How much is the boss paid? Georges Elhedery received a total of £5.36 million in relation to his first four months as chief executive and his previous role as chief financial officer. The total included an annual bonus of £1.68 million in cash and shares based on 78.79% of the maximum opportunity. The 75% vesting of long-term incentives and the impact of share price appreciation on these awards contributed £1.21 million to the total figure.

What about his predecessor? Noel Quinn, who stepped down as chief executive on 2 September, got a total of £9.16 million compared with £10.4 million in 2023. The annual bonus scheme generated £1.54 million based on 77.81% of the maximum and the 75% vesting of long-term incentives contributed £5.3 million when including share price appreciation.

How was variable pay determined? A return on tangible equity (RoTE) performance at close to the maximum and the 100% pay-out for pre-tax profit drove the annual bonus outcome. Targets on RoTE, relative total shareholder return and the transition to net zero were exceeded under the long-term incentive scheme.

What’s in the new remuneration policy? The 2:1 variable-to-fixed pay ratio in place since 2014 has been removed by UK regulators, allowing the company to return to a structure with a higher proportion of pay linked to performance. The maximum total remuneration for the chief executive is set to increase to £15.1 million, up from £10.57 million in the current policy and compared with £13.1 million in the years before 2014. HSBC is ending its use of fixed allowance shares and resetting the maximum variable pay opportunity to 900% of salary. This is split 600% for the long-term incentive scheme and 300% for the annual bonus, up from 320% and 215% respectively. Returning to the pre-2014 structure increases the proportion of pay subject to performance to 89%, compared to 69% under the current policy. Elhedery’s base salary for this year is set to increase by 9% to £1.5 million, with no fixed pay allowance. He is subject to a shareholding requirement of 600% of salary compared with 400% previously.

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How do pay levels compare? The maximum opportunity of £15.1 million and the on-target sum of £8.4 million positions the chief executive’s remuneration behind only AstraZeneca among the top companies in the FTSE 30 by market capitalisation It is sixth amongst the bank’s international peer group, led by JP Morgan. HSBC said this gap to US and European counterparts has widened in recent years despite being the third-largest company in the FTSE by market capitalisation with 211,000 full-time equivalent staff in 58 countries.

What’s the company say about the changes? It has not sought to target the quantum or structure of pay at US banks given the differences in market and business models compared to HSBC. However, it believes it is appropriate to narrow the gap as the company recruits from this talent base across various levels of the organisation. By doing so it believes this will help alleviate some of the challenges of pay compression. Performance targets and ranges on variable pay have been set with stretch to reflect the increased pay opportunities.

How did last year’s AGM go? The annual remuneration report was approved with 97.36% of votes in favour. The current remuneration policy was approved in 2022 with 95.73% support.

How’s the company doing on diversity? At the end of 2024, the board had seven female board members out of a total of 13. Pam Kaur’s appointment as chief financial officer on 1 January has increased the percentage to 57%, with two female leaders in senior roles. A total of 17.1% of HSBC’s senior leadership identify as coming from an ethnic minority background. 

BAE Systems

When: 9.30am, Wednesday 7 May.

Where: On the Lumi online platform and at Hall 1, Farnborough International Exhibition and Conference Centre, Farnborough, Hampshire GU14 6TQ.

How to participate: Shareholders are encouraged to join the AGM electronically. As the meeting will be optimised for an online experience, neither the board nor management will be present in person and will instead take part in the AGM electronically. Proxy voting instructions must be registered by no later than 9.30am, Friday 2 May. More AGM details can be found here. 

Who’s in the chair? Cressida Hogg was appointed in May 2023. Much of her executive career was spent with 3i Group.

How did the company do in 2024? Sales for the year were £28.3 billion, representing growth on a constant currency basis of 14%. Underlying earnings lifted 14% to £3.01 billion, or by 10% to 68.5p on a per share basis. Order intake of £33.7 billion pushed the overall backlog to a record £77.8 billion. A final dividend of 20.6p a share is due to be paid on 2 June, increasing the total for the year by 10% to 33p. In November, the company marked the 25th anniversary of British Aerospace and Marconi Electronic Systems coming together to create BAE Systems.

How have shares performed? Up 3% to 1,148.5p (1,620.5p on Thursday). One hundred pounds invested in BAE shares on 31 December 2014 was worth £354.42 at the end of 2024, compared to an increase to £182.85 if invested in the FTSE 100.

How much is the boss paid? Charles Woodburn’s base salary increased in January by 3% to £1.27 million. His total remuneration for 2024 amounted to £11.7 million, having received a pay package worth £13.4 million in 2023 and £12 million in 2022. Last year’s figure included cash and deferred shares worth £2.7 million after the annual bonus scheme paid 98.5% of the maximum opportunity. The 95.6% vesting of long-term incentives contributed £7.5 million. Just under £3.5 million of this figure was due to share price appreciation over the three years of the incentive plan, compared with £5.4 million for the grant of shares made a year earlier.

How was variable pay determined? Financial outcomes exceeded stretch targets and most of the key strategic objectives were fully achieved. The 2024 targets were set at the beginning of the year but revised to reflect the February acquisition of Ball Aerospace. The vesting of long-term incentives was based on total shareholder return, growth in EPS, cash flow and strategic progress metrics. Total shareholder return grew by 145%, making BAE Systems the third-highest performing stock in the FTSE 100. Average annual EPS growth of 12.5% and free cash flow of £6.8 billion exceeded the stretch targets set in 2022.

Why is the remuneration policy being renewed a year early? BAE highlights the geopolitical and economic uncertainty since the policy was last approved at the 2023 AGM with 97.61% support. The remuneration committee believes that the risks of losing key executives and the urgent opportunities to recruit new types of talent company-wide mean it is necessary to address some changes now rather than waiting another year. It added that Woodburn, Brad Greve (chief financial officer) and Tom Arseneault, (US chief executive) provide the continuity of leadership and relationships that are essential to executing existing programmes and securing new multi-decade, multi-country programmes.

What’s in the new policy? The maximum long-term incentive grant of shares for the role of chief executive is rising from 370% to 500% of base pay. As well as wanting to incentivise executives for the long term, it warns that the current opportunity has fallen below the UK market levels needed to compete for talent. It also plans to remove the current restriction that “no role will have a salary greater than the chief executive”, as well as the salary increase limit of “10% in any single year”. It wants to ensure it is able to hire niche skills in the future, or acquire a new international business where base pay levels are already higher than the company’s own.

The maximum opportunity for the chief executive under the new policy is £10.7 million, rising to £13.9 million in the event of 50% share price appreciation on long-term incentives.

What has the company said? Hogg points out that BAE competes for top talent in a restricted international market, with nationality requirements for its leaders an additional challenge. She said: “It is therefore important that our remuneration remains comparable to UK-based multinational peers. We will continue to set stretching targets to ensure that bonus payments and LTIP vesting are delivered when performance and shareholder value creation are strong.”

How did last year’s AGM go? The annual remuneration report was approved with 97.33% of votes in favour.

How’s the company doing on diversity? The percentage of women on the board was 42% at the end of 2024, including two senior roles. One board member is from a minority ethnic background.

GSK

When: 2.30pm, Wednesday 7 May.

Where: The Landmark London, 222 Marylebone Road, London, NW1 6JQ.

How to participate: Shareholders can join the AGM either electronically or in person. Proxy voting instructions should be returned no later than 2.30pm, Friday 2 May. Questions submitted by then will be answered during the Q&A session. More AGM details can be found here.

Who’s in the chair? Jonathan Symonds was appointed to the board as chair in September 2019. His previous roles have included as chief financial officer of AstraZeneca and Novartis.

How did the company do in 2024? Total sales of £31.4 billion were 7% higher on a constant currency basis. Core operating profit growth was 11% at £9.1 billion, reflecting strong Specialty Medicines performance and disciplined investment in progressing the R&D portfolio. GSK also  resolved the vast majority of the Zantac litigation overhang. An unchanged fourth quarter dividend of 16p a share is due to be paid on 10 April, resulting in 61p for the year.

How have shares performed? Down 7% to 1,346.5p (1,465.5p on Thursday).

How much was the boss paid? Emma Walmsley’s total for the year of £10.6 million compared with 2023’s £12.7 million, which was the highest sum paid for the role in the past decade. She got an annual bonus in cash and deferred shares worth £2.85 million, representing 70% of the maximum opportunity. The 80.75% vesting of long-term incentives granted in 2022 at a price of 1571p contributed £6.1 million to the overall figure.

How was variable pay determined? Sales and operating profit growth were used as the two financial measures in the annual bonus. Three of the five long-term incentive scheme measures vested in full, including sales and operating profit growth. GSK ranked in fifth position against ten global pharma peers for relative total shareholder return, resulting in a vesting of 12% out of a possible 30% for this component. The pipeline progress measure, which tracks major regulatory approvals and phase III pivotal trial starts, scored 18.75% out of a total 20%. 

What about this year’s pay? Walmsley’s base salary is increasing 5%, marginally higher than that of the general workforce. GSK said this was due to her “very strong performance” in 2024 and in previous years, as well as experience in the role. The increase also recognises that the CEO’s base salary was 4-5% behind the company’s global biopharma performance group.

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What’s in the new remuneration policy? The CEO’s proposed maximum multiple under the long-term incentive scheme increases from six times salary to eight times. The remuneration committee intends to grant 7.25 times for 2025, with eight times only used in the event that  GSK shares have re-rated or for succession purposes. The increase will be aligned to a more demanding performance scale. The CEO’s maximum, which includes an unchanged annual bonus opportunity worth 300% of salary, is £16.4 million, rising to £21.56 million in the event of 50% share price growth.

Why the big increase? The CEO’s current package is in the lower quartile of the company’s newly expanded global peer group, which the remuneration committee regards as “insufficient either to reward her performance, or to provide the appropriate capacity for succession”.

Its analysis shows that GSK is facing meaningful external pay compression, with the CEO’s rewards more consistent with ‘number 2’ roles in the peer group. This makes attracting external talent challenging. The US is GSK’s largest commercial market, representing more than 52% of sales compared to the UK’s 2%. GSK employs 12,108 people in the US, or 16% of the workforce.

How did last year’s AGM go? The company said it welcomed 125 shareholders in person and 38 shareholders virtually via the Lumi platform. All resolutions were approved with majorities ranging from 92% to 99%, including the 92.7% of votes in favour of the annual remuneration report. The last binding vote on the remuneration policy took place at the 2022 AGM, when 38.2% of votes were against the resolution.

How’s the company doing on diversity? The composition of the board is 50% female, including two senior positions. Three directors are from an ethnic minority background.

Taylor Wimpey

When: 10.30am, Wednesday 30 April.

Where: Crowne Plaza Gerrards Cross, Oxford Road, Beaconsfield, HP9 2XE.

How to participate: Questions in advance of Taylor Wimpey (LSE:TW.)'s AGM should be submitted by 10.30am, Monday 28 April, with the same deadline for proxy voting instructions. More AGM details can be found here.

Who’s in the chair? Former Land Securities chief executive Rob Noel has held the role since April 2023, having joined the board in 2019.

How did the company do in 2024? Revenues fell 3.2% to £3.4 billion as completions including joint ventures declined 2% to 10,593 and the average selling price on private homes dropped to £356,000. Operating profit fell 11.5% to £416.2 million after the margin weakened to 12.2% from 13.4% previously. Earnings per share reversed 15.2% to 8.4p a share. A final dividend of 4.66p a share is due to be paid on 9 May, reducing the total for the year by 1.3% to 9.46p or £335 million. This is in line with a policy to return 7.5% of net assets, or at least £250 million.

How have shares performed? Down 17% to 122.1p (108.7p on Thursday).

How much is the boss paid? Jennie Daly’s salary has increased from £795,675 to £850,000, reflecting an additional 3.8% on top of the company-wide average rise of 3%. Her total remuneration for 2024 amounted to £3.07 million, up from £2.2 million the year before. This included £1.12 million in cash and deferred shares based on 94% of the maximum annual bonus opportunity. The 54.3% vesting of long-term incentives contributed £1.06 million.

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How was variable pay determined? The business achieved legal completions at the top end of the guidance range set at the start of the year, which together with cost discipline meant the operating profit metric responsible for 30% of the annual bonus delivered an above-target result. The company’s build quality score was the highest of listed peers in the sector, leading to the maximum under this measure. Total shareholder return of 9.5% for 2022-2024 placed the company in the top quartile of the housebuilding peer group, meaning that this element of the long-term incentive scheme paid out in full. The company did not meet the required level for targets set in relation to return on net operating assets and operating profit margin.

What’s behind the additional pay rise? On Daly’s appointment in April 2022, her salary was positioned below that of her predecessor Pete Redfern. This year’s review results in a mid-market salary, which the remuneration committee believes is more reflective of her experience and skills. It adds that incentive opportunities have slipped behind the mid-market level for the sector and the FTSE more generally. This will be considered as part of a review of remuneration policy ahead of next year’s AGM. The maximum bonus opportunity is 150% of salary with executive directors granted long-term incentives shares worth 200% of salary. 

How did last year’s AGM go? The annual remuneration report was approved with 96.57% of votes in favour.

How’s the company doing on diversity? The board at the end of 2024 comprised 44% women, including one senior position, and one director from an ethnic minority background.