AGM alert: Lloyds Bank, Barclays, Centrica, LSE

A £245,000 pay rise for Centrica (LSE:CNA) boss Chris O’Shea is likely to be in the sights of the British Gas owner’s shareholders when they attend the company’s AGM next month.

His base salary increase of 28.7% to £1.1 million came into effect on 1 April, the day that households were hit by another rise in the energy price cap to an annual £1,849.

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Centrica said its increased size and complexity and O’Shea’s strong record warranted positioning his pay between the median and upper quartile of other CEOs in the FTSE 100.  

It points to the improvement in shareholder value since he took the helm in April 2020, when the company was ranked 154th in the FTSE with a market capitalisation of £1.9 billion. Centrica ended last year 62nd as a consistent member of the FTSE 100 Index from 2022. 

Among other forthcoming AGMs, the pay of Lloyds Banking Group (LSE:LLOY) chief executive Charlie Nunn will be in focus after the remuneration committee increased his base salary to £1.375 million with a matching figure through a fixed share award.

Barclays (LSE:BARC) is asking shareholders to approve a new remuneration policy a year ahead of schedule as it responds to 2023’s removal of the industry’s 2:1 bonus cap.

Barclays

When: 11am, Wednesday 7 May.

Where: QEII Centre, Broad Sanctuary, Westminster SW1P 3EE.

How to participate: In light of limited interest in virtual meeting arrangements in recent years, this year’s AGM is being held as a physical meeting. Proxy voting instructions should be returned no later than 11an, Friday 2 May. More AGM details can be found here.

Who’s in the chair? Nigel Higgins has been in the role since May 2019. He spent 36 years at Rothschild, where he was most recently deputy chairman.

How did the company do in 2024? Group income of £26.8 billion rose 6% on a year earlier, reflecting solid performances in all five operating businesses. Pre-tax profit was £8.1 billion compared with 2023’s equivalent of £7.5 billion, while return on tangible equity (RoTE) of 10.5% was in line with a greater-than-10% target for 2024. The CET1 ratio of 13.6% was within the range of 13% to 14% and capital distributions announced in relation to 2024 were £3 billion. Dividends accounted for £1.2 billion of this figure, with the 4 April payment of 5.5p a share resulting in a 6.5% increase in the total for the year to 8.4p.

How have shares performed? Up 74% to 268.15p (260.25p on Thursday).

How much is the boss paid? Chief executive C.S. Venkatakrishnan (known as Venkat) received  total remuneration of £10.5 million, the highest sum of the past decade. The figure is 127% higher than 2023’s total after his first vesting of shares under the long-term incentive scheme. This was further boosted by share price appreciation. His fixed pay of £2.9 million was delivered quarterly 50% in cash and 50% in shares. The annual bonus of £2.2 million was based on 81% of the maximum opportunity, while the 67.5% vesting of long-term incentives contributed £5.1 million to the overall figure. Ninety percent of Venkat’s total variable pay awards were in shares, which must be retained for a period of between two and eight years from grant.

How was variable pay determined? Profit before tax provided a 40.1% outcome out of a possible 50% and total operating expenses 9.4% out of 10%. Performance against strategic non-financial measures resulted in 17.5% out of a possible 25%. Personal objectives were also assessed. The vesting of long-term incentives reflected average RoTE exceeding the target range, as well as relative total shareholder return between median and upper quartile of the company’s peer group. The increase in the Barclays share price over the period accounted for 36% of the vesting value, or £1.85 million.

What about other staff? The group incentive pool in relation to 2024 trading is £1.9 billion, up 10% year on year. This figure is broadly the same as the 2021 performance pool, following reductions in each of the previous two years. The bank’s improvement in trading has reduced the compensation to income ratio for 2024 to 32.7%, the lowest since 2015. A significant portion of the pool is delivered in shares, most of which will be deferred over several years. In addition, all employees below managing director level and excluding material risk takers will receive a one off award of 170 Barclays shares. This is currently worth just over £440 per person and will need to be retained until after the bank’s 2026 results.

Why is the current remuneration policy expiring a year early? Regulatory changes announced in October 2023 removed the industry’s 2:1 bonus cap, giving the bank additional flexibility in how it structures executive director pay. The current policy was approved at the 2023 AGM with 96.69% of votes in favour.

How is the remuneration policy changing? A larger proportion of each executive director's total compensation opportunity will be delivered as variable pay. This means Venkat’s salary of £1.59 million for 2025 is reduced by 46% on last year’s fixed pay award in cash and shares, when the company operated under the 2:1 bonus cap. His proposed annual bonus opportunity of 250% of salary compares with 93% of his fixed pay under the current policy, while the maximum long-term incentive award has increased to 550% compared with 140% of fixed pay previously. The maximum outcome of £14.3 million compares with £9.8 million under the current policy, excluding share price appreciation. This is based on outstanding performance well beyond external targets, including average RoTE of at least 14% compared to a target of greater than 12% in 2026. A threshold performance outcome reduces compensation by 20% versus the amount under the current policy.

What’s the company say about the new proposals? It believes the policy strengthens the alignment of executive pay with shareholder interests. A larger proportion of variable pay will be delivered through the long-term incentive plan rather than annual bonus in order to promote a longer-term focus. It said the 2:1 bonus cap and only moderate fixed pay increases since then has left the maximum total compensation opportunity uncompetitive versus the market. It said: “The competitive positioning would have been better had the 2:1 bonus cap not been introduced. For example, if we were to take the maximum total compensation opportunity of the Barclays CEO in 2011, and assume salary increases of 2%-3% per annum thereafter, the maximum total compensation opportunity for the Barclays CEO in 2025 might have been in the range of £15 million-£17 million.”

How did last year’s AGM go? The annual remuneration report was approved with 97.54% of votes in favour.

How’s the company doing on diversity? The gender split of the board was 38% female at the end of 2024, including one senior role. At least one member of the board is from a minority ethnic background.

Lloyds Banking Group

When: 11am, Thursday 15 May.

Where: Edinburgh International Conference Centre, The Exchange, Edinburgh, EH3 8EE.

How to participate: The company’s articles of association require the AGM to be held in Scotland. The meeting will be available to watch remotely but the live webcast won’t have facilities for shareholders to ask questions or vote online. The company will endeavour to answer AGM questions submitted by 5pm, Friday 9 May in advance of the proxy voting deadline of 11am, Tuesday 13 May. More AGM details can be found here.

Who’s in the chair? Robin Budenberg has held the role since January 2021. He previously managed the Government’s investments in UK banks following the 2008 financial crisis.

How did the company do in 2024? Underlying net interest income of £12.8 billion fell 7%, reflecting a lower banking net interest margin of 2.95% and broadly stable average interest-earning banking assets of £451.2 billion. Underlying profit fell 19% to £6.3 billion and statutory profit by 20% to £5.97 billion. Remediation costs of £899 million in the year included £775 million in the fourth quarter, of which £700 million was in relation to the potential impact of motor finance commission arrangements. A final dividend of 2.11p a share is due to be paid on 20 May, resulting in a 15% increase in the total for 2024 to 3.17p.

How have shares performed? Up 15% to 54.8p (66.3p on Thursday)

How much was the boss paid? Charlie Nunn’s single figure of remuneration increased 53% to £5.6 million, reflecting his first vesting of long-term incentives since he joined in 2021. Excluding this sum of £2 million, the year-on-year figure would have been down 2% after his annual bonus in cash and shares fell to £1.13 million. This was based on 68.1% of the maximum after Nunn delivered the first phase of the company’s strategy and met key financial targets, including profit after tax and return on tangible equity. He got 80.3% of the maximum in 2023.

What about this year’s pay levels? Nunn’s base salary on appointment was set 13% lower than his predecessor, due to this being his first lead executive role in a listed environment. His fixed pay has since risen by 5% over three and a half years. The remuneration committee has reversed the discount applied on his appointment, effective from January, and applied a 3% increase to his base salary to £1.375 million from April. This is matched by an equivalent fixed share allowance, which is released in equal tranches over three years. 

Why the changes? Lloyds said it has improved the competitiveness of Nunn’s total reward opportunity, but the package remains below the median of both its UK banking peer group and the FTSE 30. The increase in fixed pay comes at a time when regulatory changes have allowed  the bank to set its own variable to fixed pay ratio. It anticipates that the fixed share allowance element will be significantly reduced and a higher, performance-related, variable reward opportunity will be recommended to shareholders at the 2026 AGM.

What about the bonus pool? The figure of £368 million is a year-on-year reduction of 4%, reflecting the fall in underlying profit. The long-term incentive plan awards granted to about 750 staff in 2022, including executive directors, have vested in full. The variable to fixed pay ratio for the company’s material risk takes was set at a maximum ratio of 8:1 for 2024 and later years.

How did last year’s AGM go? The annual remuneration report was approved with 96.36% of votes in favour, while the remuneration policy was backed at the 2023 AGM with 96% support.

How’s the company doing on diversity? The gender split of the board at the end of 2024 was 50% female, including one senior position. The company exceeds the Parker Review recommendation of having at least one Black, Asian or minority ethnic board member.

Centrica

When: 10.30am, Thursday 8 May.

Where: Edwardian Manchester, Free Trade Hall, Peter Street, Manchester M2 5GP.

How to participate: Shareholders can join the meeting via a live webcast. Questions for the meeting may be submitted in advance up until 5pm, Thursday 1 May while the deadline for proxy voting instructions is 10.30am, Tuesday 6 May. More AGM details can be found here.

Who’s in the chair? Former Sainsbury’s finance director Kevin O’Byrne joined the board in 2019 and is hosting his first AGM as chair. He has replaced Scott Wheway, who stepped down in December.

How did the company do in 2024? Centrica said a 34% fall in earnings to £2.3 billion was a strong performance in a more normal energy price environment. Retail operating profit fell to £427 million from £799 million in 2023, while the surplus in the Optimisation trading division more than halved to £380 million. Earnings per share of 19p compared with 2023’s 33.4p, while the group ended the year with net cash slightly higher at £2.86 billion. A final dividend of 3p a share is due to be paid on 5 June, resulting in a 13% increase in the total for the year to 4.5p.

How have shares performed? Down 5% to 133.6p (141.5p on Thursday).

How much is the boss paid? Chris O’Shea’s salary increased on 1 April by 28.7% to £1.1 million. His total remuneration for 2024 amounted to £4.3 million, which compared with £8.2 million in 2023. O’Shea’s annual bonus amounted to £1.39 million in cash and deferred shares, based on 81% of the maximum opportunity. The full vesting of the long-term Restricted Share Plan contributed £1.99 million, which compared with the previous year’s £5.9 million. 

Why the big rise in base pay? Centrica’s pay committee said O’Shea’s remuneration is no longer sufficiently aligned with competitive market rates given the size and complexity of Centrica. It added that his performance and experience over the last four years warrants positioning his pay between the median and upper quartile of other CEOs in the FTSE 100. The median FTSE 100 benchmark salary is £968,000. The committee also said it wanted a competitive remuneration structure that is capable of attracting candidates in the future for what is now a much bigger business with attractive investment opportunities. The committee considered whether the increase should be phased over multiple years but determined that it would be inappropriate to continue to pay him below market competitive rates. The increase impacts the potential of his variable remuneration, given that he is eligible to receive an annual bonus of 200% of salary and 150% of salary under this year’s Restricted Share Plan.

How has the company performed during his tenure? When O’Shea was appointed on 14 April 2020, the company was ranked 154th in the FTSE with a market capitalisation of £1.9 billion. At the time, his pay was benchmarked against the top half of the FTSE 250. On 31 December 2024, Centrica was ranked 62nd in the FTSE with a market value of £6.8 billion having been a consistent member of the FTSE 100 Index since 2022. The shareholder value created since his appointment is made up of an increase in market capitalisation of £4.9 billion, share buybacks of £1 billion and dividends paid of over £400 million.

What else is changing in the remuneration policy? The chief executive’s maximum Restricted Share Plan (RSP) award is increasing from 150% of salary to 200% in order to support the competitive positioning of target remuneration. However, given the CEO’s salary increase in 2025 and, based on feedback from shareholders, the committee has decided to phase the introduction of the higher RSP awards. It will grant the 2025 RSP award to the CEO at the current maximum of 150% of salary, with the first award at the higher limit of 200% of salary granted from 2026 subject to shareholder approval. The increase will be accompanied by a rise in the CEO’s minimum required shareholding guideline from 300% to 400% of salary.

How does his total remuneration compare? O’Shea’s target total remuneration for 2025 is £3.96 million, slightly above the FTSE 100 median of £3.8 million and below the upper quartile of £5.47 million. The maximum opportunity of £5.1 million compares with the median of £3.9 million and the upper quartile of £8.6 million.

How was variable pay determined? Annual bonus payments were based on earnings per share, a scorecard of financial and operational measures and individual performance against strategic objectives. An earnings per share figure of 19p beat the maximum level set at the start of the year. The Restricted Share Plan awards were subject to a performance underpin for the period between 2022 and 2024.

Is there a climate vote? An advisory, non-binding vote is due to take place on the Climate Transition Plan, which the company first published in 2021. The company has since accelerated its net zero target to 2040, five years ahead of its original goal and 10 years ahead of global benchmarks. It has also maintained its commitment to helping customers achieve net zero by 2050. Since 2019, the company has reduced business emissions by 20% and customers’ energy greenhouse gas intensity by 10%.

How did last year’s AGM go? The annual remuneration report was approved with 90.08% of votes in favour. The remuneration policy was last approved at the 2022 AGM with 83.48% support.

London Stock Exchange

When: 10.30am, Thursday 1 May.

Where: 87 Barts Close, 87 Bartholomew Close, London EC1A 7EB.

How to participate: Proxy voting instructions for the London Stock Exchange Group (LSE:LSEG) AGM should be returned no later than 10.30am, Tuesday 29 April. More AGM details can be found here.

Who’s in the chair? Former Experian chairman and chief executive Don Robert has held the role since May 2019.

How did the company do in 2024? Growth across the divisions of data and analytics, FTSE Russell, risk intelligence, capital markets and post trade meant the company reported total income of £8.5 billion, up 8.4% on a constant currency basis. Adjusted operating profit rose to £3.2 billion, up 9.5% on a constant currency basis and adjusted earnings per share increased 12.2% to 363.5p as a result of revenue growth and improving efficiency. A final dividend of 89p a share is due to be paid on 21 May, increasing the total for the year by 13% to 130p. Strategic highlights have included the release of the first products under LSEG’s Microsoft partnership.

How have shares performed? Up 22% to 11,285p (11,200p on Thursday).

How much is the boss paid? David Schwimmer’s base salary of £1.375 million is unchanged for this year. Total remuneration for 2024 amounted to £7.86 million, the most he has received since becoming chief executive in 2018. The award under the annual bonus scheme was 73% of the maximum opportunity, resulting in Schwimmer receiving cash and deferred shares worth £3 million. The 82% vesting of long-term incentives contributed £2.46 million, with an additional £734,000 the result of the share price growth on these awards.

How did last year’s AGM go? There was 88.99% support for the new three-year remuneration policy, which increased the maximum bonus opportunity from 225% to 300% of salary and the long-term incentive opportunity from 300% to 550%. Schwimmer’s base salary also rose from £1 million to £1.375 million. The company’s remuneration committee made the changes in order to close a “pay-and-performance mismatch” against 14 of LSEG’s peers including Nasdaq, RELX and FactSet. The committee also highlighted the pay compression between its CEO and other recent senior hires. The annual remuneration report got 97.48% support.

How was variable pay determined? The target for group adjusted operating profit, which accounted  for 60% of the annual bonus, was exceeded following growth of 9.5%. The average earnings per share element of the long-term incentive award made in 2022 vested at 70% and the relative total shareholder return element at 100%. 

How’s the company doing on diversity? Four of the 11 directors are women, including in one senior role. One director is from a minority ethnic background.