AGM alert: Lloyds Bank, Next, Haleon, Rentokil

Simon Wolfson’s £4.5 million for a successful year running Next (LSE:NXT) and the pay of Lloyds Banking Group (LSE:LLOY) boss Charlie Nunn will be in the annual general meeting (AGM) spotlight during May.

The Lloyds gathering in Glasgow will scrutinise Nunn’s £3.68 million total remuneration, which included an annual bonus worth 80% of the maximum.

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Next rewarded its chief executive with the highest sum since 2015, reflecting a year when shareholders reaped the benefit of his actions through a 29% rise in share price.

Meanwhile, Rentokil Initial (LSE:RTO) will seek approval for new pay arrangements that take into account the pest control firm’s increased scale in North America.

Lloyds Banking Group

When: 11am, Thursday 16 May.

Where: SEC Armadillo, Exhibition Way, Glasgow G3 8YW.

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. Proxy voting instructions must be received by Equiniti no later than 11am, Tuesday 14 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 2023? Net income of £17.9 billion rose 3%, driven by a higher banking net interest margin. Operating costs of £9.1 billion increased in line with guidance, reflecting factors such as strategic investment and inflationary pressures. Remediation increased to £675 million and included a £450 million provision for the potential impact of the Financial Conduct Authority (FCA) review into motor finance commission arrangements. Underlying profits of £7.8 billion rose 11% and adjusted earnings per share by 2.7p to 7.6p. A final dividend of 1.84p is due to be paid to the company’s two million shareholders on 21 May, meaning a 15% increase in the total for the year at 2.76p and taking the overall amount returned in 2023 to £3.8 billion.

How have shares performed? Up 4% to 47.7p in 2023 (51.2p on Thursday).

How much is the boss paid? Charlie Nunn’s salary for this year has increased 4% to £1.18 million, while his fixed share allowance is up 4% to £1.09 million and released in equal tranches over three years. Nunn’s single figure of remuneration for 2023 was £3.68 million, down 2% on a year earlier. The decline was due to lower short term variable award of £1.28 million, which was based on 80.3% of the maximum opportunity compared with 84.1% the year before. The result included the maximum award under the metrics for profit after tax and return on tangible equity. The long-term share plan vested at 100% but this did not apply to the chief executive as he was not in role at the time of grant. 

What about the bonus pool? Recognising the importance of certainty of earnings, the group consolidated its Group Performance Share into base salary for around 32,000 staff. This resulted in a lower overall figure of £384 million. On a like-for-like basis, including the consolidation of variable pay, the 2023 pool would have been higher than 2022. The approved pool includes the impact of a provision for the potential impact of the recently announced FCA review into historical motor finance commission arrangements.

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How did last year’s AGM go? A new remuneration policy was backed with 96% of votes in favour. It returned Lloyds to a performance-based long term incentive plan, in line with the majority of its peers. The first grant under the new policy has seen Nunn and chief financial officer William Chalmers granted shares worth 300% of salary. Half the vesting outcome will be tied to financial performance in the form of return on tangible equity, relative total shareholder return and capital generation. The annual remuneration report got 96.05% support.

How’s the company doing on diversity? The latest FTSE Women Leaders Review report disclosed that women are represented in over 40% of senior roles. The gender split at board level is 45.5%, including one director in a senior role. Lloyds meets the recommendation of the Parker Review with two Black, Asian and minority ethnic members on the board.

Haleon

When: 3pm, Wednesday 8 May.

Where: A virtual meeting from Haleon (LSE:HLN)’s London offices and accessed via the Lumi platform.

How to participate: The deadline for proxy voting instructions is 3pm, Friday 3 May. With the significant majority of the company’s share ownership situated outside of the UK, the virtual meeting allows more shareholders to participate. More AGM details can be found here.

Who’s in the chair? Dave Lewis was Tesco chief executive from 2014 to 2020.

How did the company do in 2023? The Sensodyne and Panadol consumer healthcare company’s revenues rose 4.1% to £11.3 billion, up 8% on an organic basis. Adjusted operating profit growth of 10.4% to £2.55 billion was achieved on a margin 50 basis points higher at 22.6%. Haleon ended 2023 with net debt of £8.5 billion, having reduced the figure by £2 billion in the 18 months since its demerger from GSK. A final dividend of 4.2p is due to be paid on 16 May, with the 6p total for the year equivalent to 35% of earnings.

How have shares performed? Down 2% to 321.6p (331.5p on Thursday).

How much is the boss paid? The annual salary of Brian McNamara increased in April by 4.5% to £1.3 million. His total remuneration for 2023 amounted to £5.76 million, including cash and shares worth £1.88 million after the annual bonus scheme paid 75.2% of the maximum opportunity. This outcome was reduced by ten percentage points from 85.1% in order to reflect the high inflationary impact on the performance metrics of organic sales growth and adjusted operating profit. The 81% vesting of shares granted in March 2023 contributed £2.37 million to his overall figure, a result that reflected the company’s performance against the targets of cumulative free cash flow and the ratio of net debt/adjusted earnings.

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How did last year’s AGM go? The three-year remuneration policy was approved with 98.19% of votes in favour while the annual remuneration report got 98.72% support. 

How’s the company doing on diversity? The board exceeds the FCA listing rules in respect of female representation and ethnic diversity, at 45% and 18% respectively, but there are no women in the four senior roles.

Next

When: 9.30am, Thursday 16 May. 

Where: Leicester Marriott Hotel, Smith Way, Grove Park, Leicester LE19 1SW.

How to participate: Proxy voting instructions should be returned no later than 9.30am, Tuesday 14 May. More AGM details can be found here.

How did the company do in the year to 27 January? Total revenues of £5.84 billion rose 5.9%, including 4% growth in full-price sales. Five upgrades to City guidance during the year led to record profits of £918 million, up 5% on a year earlier. Earnings per share of 578.8p rose 0.3%. Strong cash flow meant Next returned £425 million to shareholders through a combination of dividends (£248 million) and share buybacks (£177 million). A final dividend of 141p per share is due to be paid on 1 August, resulting in a 1p increase in the total for the year at 207p.

How have shares performed? Up 29% to 8,508p (9,104p on Thursday).

How much is the boss paid? Simon Wolfson’s base salary for the current financial year has increased 4% to £944,000. His total remuneration for 2023/24 amounted to £4.52 million, up from £2.5 million the year before and the highest sum since 2015. The figure included cash and deferred shares worth £1.36 million after the annual bonus scheme paid the maximum amount as underlying pre-tax earnings per share of 6.8% exceeded the 2.6% threshold. Long-term incentives granted in September 2020 vested at 63% after Next’s total shareholder return ranked sixth out of 20 companies. The second set granted in April 2021 vested at 89% based on a fifth-place performance, resulting in a total contribution of £2.07 million to the final figure. Wolfson has built up a shareholding of about 1.4 million shares, excluding deferred bonus shares and long-term incentives yet to vest.

What’s the company’s approach to pay? The annual report describes pay arrangements as moderate, with overall remuneration levels for executive directors below the FTSE 100 median. It adds that variable pay is tied to clear and objective financial performance measures, without any subjective or personal component. “Consequently, these arrangements serve shareholders well; there is a long track record of their variable element paying out when performance is good, and not paying out when performance is weaker.” It said its executive directors have an excellent track record in delivering strong and resilient company performance and growth, as evidenced by the results this year and a total shareholder return of 95% over a ten year period.

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What about the finance director? Amanda James, who has been with Next for 28 years and finance director for nine years, retires from the board in July. Her successor Jonathan Blanchard, who was most recently chief operating officer at Reiss, has been recruited on the same salary of £575,000. James got a total of £2.42 million in 2023/24, including an annual bonus of £553,000 and long-term incentives worth £1.26 million. 

How did last year’s AGM go? The new three-year remuneration policy was backed with 84% of votes in favour and the annual remuneration report got 94.8% support.

How’s the company doing on diversity? The gender balance of the company’s executive committee and its direct reports has ranked in the top three of the FTSE Women Leaders Review every year since 2017. April’s appointments of two female board members brings the percentage of women directors to 46%, although the imminent departures of non-executive director Dianne Thompson and finance director Amanda James will return representation below the 40% threshold and mean there are no senior roles held by women.

Rentokil Initial

When: 11.30am, Wednesday 8 May.

Where: Compass House, Manor Royal, Crawley, West Sussex RH10 9P.

How to participate: This will be a hybrid meeting, with a facility for shareholders to attend, ask questions and vote on the resolutions online. Proxy voting instructions should be returned no later than 11.30am, Friday 3 May. More AGM details can be found here.

Who’s in the chair? Richard Solomons, the former chief executive of InterContinental Hotels, has held the role since May 2019.

How did the company do in 2023? Revenues rose 44.7% to £5.37 billion, representing organic growth of 4.9% and the impact of the Terminix acquisition in North America. Adjusted profits improved by 43.8% to £766 million and earnings per share by 30.8% to 15.14p. A final dividend of 5.93p is due to be paid on 15 May, lifting the total for the year by 15% to 8.68p a share.

How have shares performed? Down 14% to 440.8p (410.5p on Thursday).

How are pay levels changing? A review of base salaries in order to reflect the growth in size and complexity of the group since the Terminix acquisition in October 2022 has taken Andy Ransom’s base salary to £1.04 million. This represents a 12% increase in total, with 4.5% being the 2024 pay rise across management levels and 7.5% the adjustment to align with the market. Chief financial officer Stuart Ingall-Tombs now gets £635,000. As the change in the scope of their roles occurred in October 2022 and the salary increase is not taking place until July 2024, the remuneration committee concluded that the increases were sufficiently phased.

How much was the boss paid last year? Ransom’s total remuneration fell by £1 million to £3.3 million and included an annual bonus of £981,000 in cash and deferred shares. This was 58.7% of the maximum opportunity based on the targets of annual operating profit and revenue. The 48.7% vesting of long-term incentives contributed £1.4 million to the overall figure, a result impacted by share price depreciation over the period. The measure of total shareholder return, which accounted for half the incentive plan’s weighting, lapsed in full.

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What’s in the new remuneration policy? The policy approved by shareholders in 2021 with 77.39% of votes in favour has been updated in light of the company’s increased complexity following the Terminix acquisition and to ensure appropriate incentivisation for executive directors. The maximum opportunity under the annual bonus scheme will rise from the “below-market level” of 180% of salary to 225%. For this year, the uplift in bonus opportunity will be aligned to the delivery of organic revenues growth and integration synergy targets in the North American business. Bonus deferral into shares will increase to 50% from 40%. The performance share plan will remain at 375% of salary for the chief executive, whose total opportunity is above the market median in the event of a strong performance. The company said this approach recognised his high level of experience, with more than 10 years in the position, and his delivery of superior returns for stakeholders during his tenure.

What’s the company say about the changes? “We understand that the external environment is not conducive to material pay opportunity increases and we have therefore been thoughtful as to how we can ensure that we have appropriate packages in place without being excessive.”

How did last year’s AGM go? The annual remuneration report got 98.71% of votes in favour.

How’s the company doing on diversity? Board membership comprises 33% women and two directors from an ethnic minority background. All four senior roles are held by men. The company was placed 83rd in February’s 2023 FTSE Women Leaders Review for women on boards and in leadership in the FTSE 100.