AGM alert: Imperial Brands and WH Smith face pay votes
Both these high-profile companies have been rewarded CEOs handsomely, but what do shareholders think? City writer Graeme Evans analyses some of the key company votes in the coming weeks.
10th January 2025 11:44
by Graeme Evans from interactive investor
A £9.1 million pay deal for the boss of Imperial Brands (LSE:IMB) and the award of a big salary increase for running WH Smith (LSE:SMWH) face shareholder scrutiny at AGMs later this month.
The total for Stefan Bomhard, who has been chief executive of Imperial since 2020, included an annual bonus of £2.3 million as well as £5.1 million from the vesting of long-term incentives.
Imperial pointed out it was now a “demonstrably stronger business”, having delivered returns to shareholders of 78.7% since the launch of a five-year strategy in 2021.
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Meanwhile, WH Smith has revealed in its annual report that Carl Cowling’s base salary as chief executive has increased for this year by 7.5% to £670,800. The retailer is due to hold its AGM on 29 January, the same day as Imperial Brands.
Imperial Brands
When: 9.30am, Wednesday 29 January.
Where: Bristol Marriott Royal Hotel, College Green, Bristol BS1 5TA.
How to participate: The deadline for the return of proxy voting instructions is 9.30am, Monday 27 January. More AGM details can be found here.
Who’s in the chair? Investment banker Thérèse Esperdy joined the board in July 2016 and has been its chair since January 2020.
How did the company do in the year to 30 September? Tobacco pricing increased 7.8%, more than offsetting declining volumes, to deliver tobacco net revenue growth of 3.8% at constant currency. Next generation products increased 26%. This supported full year reported operating profit growth of 4.5% to £3.55 billion and cash generation in line with the group’s medium-term guidance. Adjusted earnings per share of 297p rose 10.9% at constant currency, while the dividend for the year increased 4.5% to 153.42p a share. Cumulative returns from dividends and share buybacks between 2021 and the current financial year amount to £10 billion, representing 67% of the company’s market capitalisation at January 2021.
How have shares performed? Up 30% to 2,173p (2,633p on Thursday). Total shareholder return since the launch of the company’s five-year strategy in January 2021 was 78.7% at the end of September, compared with the FTSE 100’s 42.7%.
How much is the boss paid? Stefan Bomhard’s base salary increased in October by 3.4% to £1.45 million. His total remuneration for 2023/2024 rose to £9.1 million, the highest sum paid to the company’s chief executive in the past decade. This included cash and deferred shares worth £2.35 million based on 83.8% of the maximum annual bonus opportunity. The 74.5% vesting of long-term incentive shares granted in February 2022 contributed £5.12 million.
How was variable pay determined? The annual bonus was based 40% on adjusted operating profit, 15% on adjusted operating cash conversion, 15% on market share and 10% on next generation product net revenues. Strategic objectives formed the remaining 20% of the bonus. The long-term incentive plan awards were subject to earnings per share, the ratio of net debt to earnings, return on invested capital and relative total shareholder return.
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What’s the company say? The chair of the remuneration committee said the five-year strategy launched in 2021 has transformed Imperial into a “demonstrably stronger business”, delivering returns to shareholders over this period of 78.7%. Sue Clark added: “Investment in consumer capabilities, simplified and more efficient operations, and a transformed performance culture, have translated into strong financial results and capital returns to shareholders.”
How did last year’s AGM go? The binding vote on the new three-year remuneration policy got 95.51% support, while 97.72% of votes cast were in favour of the annual remuneration report.
How is the company doing on diversity? Female representation on the 11-strong board has increased to five, including the roles of chair and senior independent director. Eighteen percent of board members identified as being from an ethnic minority background.
WH Smith
When: 9.30am, Wednesday 29 January.
Where: Herbert Smith Freehills, Exchange House, Primrose Street, London EC2A 2EG.
How to participate: Proxy voting forms should be returned no later than 9.30am, Monday 27 January. More AGM details can be found here.
Who’s in the chair? Annette Court has held the role since December 2022. She is the former CEO of Direct Line Insurance and chair of Admiral.
How did the company do in the year to 31 August? Revenues rose 7% to £1.92 billion, including an 11% improvement in the travel division. The headline profit figure rose 16% to £166 million and underlying earnings per share by 11% to 89.3p. A final dividend of 22.6p per share is due to be paid on 6 February, increasing the total for the year by 16% to 33.6p.
How have shares performed? Down 12% at 1,283p (1,161p on Thursday).
How much is the boss paid? Carl Cowling’s salary increased in April by 7.5% to £670,800. His single figure of remuneration for 2023/24 was £2.6 million, slightly lower than the previous year after the annual bonus scheme paid £884,383 in cash and deferred shares. The award represented 82.5% of the maximum opportunity rather than the 100% of the previous year. The 71% vesting of long-term incentives contributed £1.1 million to the overall figure.
Why the big salary increase? The move followed a benchmarking exercise, which indicated that the CEO’s salary was towards the lower quartile of the company’s peer group and that total compensation for superior performance was around median. The remuneration committee has also increased Cowling’s long-term incentive plan grant from 335% to 350% of salary. This means that total potential remuneration for superior performance sits between the median and upper quartile. Cowling has been chief executive since November 2019.
How was variable pay determined? The headline profit figure used in setting the annual bonus came in at £166 million compared with the previous year’s £143 million. This also resulted in almost 2,400 staff across the group receiving a bonus. The vesting percentage of long-term incentives was determined by growth in headline earnings per share and three-year relative total shareholder return between the median and upper quartile.
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What’s in the new remuneration policy? No significant changes are proposed to the policy,which was last approved with 88.36% of votes in favour at the 2022 AGM. The remuneration committee said the policy had served the company well for many years and that it continued to support key strategic goals.
How did last year’s AGM go? The annual remuneration report was approved with 97.08% of votes in favour.
How’s the company doing on diversity? The proportion of women at board level increased to 50%, including one senior position. One director is from an ethnic minority background.
SSP
When: 10am, Tuesday 28 January.
Where: Travers Smith LLP, 10 Snow Hill, London EC1A 2AL.
How to participate: The proxy voting deadline is 10am, Friday 24 January. More AGM details can be found here.
Who’s in the chair? Former BAA chief executive Mike Clasper has held the role at SSP Group (LSE:SSPG) since February 2020.
How did the company do in the year to 30 September? Revenues of £3.4 billion rose 14%, or by 17% on a constant currency basis, and included like-for-like growth of 9%. Operating profit of £206 million rose by 26% and earnings per share by 41% to 10p. A final dividend of 2.3p a share is due to be paid on 27 February, lifting the total for the year by 40% to 3.5p.
How have shares performed? Down 21% at 159.3p (173.9p on Thursday).
How much is the boss paid? Patrick Coveney’s salary increased in October by 3% to £826,150. His single figure of remuneration for 2023/24 amounted to £1.6 million, down from £2.4 million the previous year after his annual bonus fell to £211,000 or the equivalent of 15% of the maximum opportunity. There was no payout under the financial measures of the bonus scheme, partly due to the fact that performance in Europe came in short of expectations. The vesting of long-term incentive awards contributed £569,000 to the final figure.
How did last year’s AGM go? The annual remuneration report was approved with 97.28% of votes in favour. The three-year remuneration policy got 94.79% support.
Why is there another vote on remuneration policy at this year’s AGM? SSP believes a large-scale review of policy should be driven by the strategic context of the business rather than the mandatory remuneration policy approval cycle. It is asking shareholders to approve the company’s return to a performance-based structure for long-term incentives.
How will the new policy work? The current Restricted Share Plan (RSP) awarded 100% of salary subject to performance underpins. The planned change to a Performance Share Award will see executive directors receive 200% of salary, subject to targets on earnings per share, return on capital employed and relative total shareholder return over a period of three years.
Why the change? The remuneration committee says that SSP is very different to when the RSP was introduced at the time of the pandemic in 2021, with a clear action plan now in place for driving profitability and margin enhancements to achieve strong returns. No other changes are planned to the remuneration policy approved at the 2024 AGM.
How’s the company doing on diversity? SSP has gender parity at board level, with one female director in a senior position, and also meets the Parker Review ethnicity target.
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