Are these three CEOs really worth the big bucks?

Sage Group (The) (LSE:SGE) chief executive Steve Hare has been handed a 10% pay rise after his five years in charge powered the accounting software firm up the FTSE 100 rankings.

The company’s remuneration committee said Hare’s new salary of £925,000 and enhanced long-term incentive opportunities still left his pay arrangements a long way short of those offered by US rivals.

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Over £6 billion of shareholder value has been created during Hare’s tenure, with Sage one of the best performing stocks in the FTSE 100 index last year. Its AGM takes place on 1 February.

Imperial Brands

When: 9.30am, Wednesday 31 January.

Where: Bristol Marriott Royal Hotel, College Green, Bristol, BS1 5TA.

How to participate: Proxy voting instructions need to be returned no later than 9.30am, Monday 29 January. More AGM details can be found here.

Who’s in the chair? Thérèse Esperdy, who held senior roles at JP Morgan, joined the Imperial Brands (LSE:IMB) board in 2016 and was appointed to her current role in January 2020.

How did the company do in the year to 30 September? Net revenues rose 2.8% to £8 billion, with the figure for next generation products up 26%. On an adjusted basis, operating profits improved by 5.2% to £3.9 billion and earnings per share by 5.1% to 278.7p. Total shareholder returns of £2.4 billion, equivalent to 15% of total market value, have been announced for the current financial year. This includes a 10% increase in share buybacks to £1.1 billion and a 4% rise in annual dividend to 146.82p a share, with 51.82p a share due for distribution on 28 March.

How have shares performed? Down 9% to 1,667p (1,858.5p on Thursday).

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How much is the boss paid? Stefan Bomhard, who was appointed in July 2020, has received a 4.5% increase in base salary to £1.4 million for the new financial year. His total remuneration in 2022/23 soared to £8.6 million after the 85% vesting of long-term incentives generated a provisional £5.1 million. The annual bonus scheme contributed £1.9 million based on 71.6% of the maximum opportunity, half of which is deferred into Imperial shares for three years. Bomhard’s overall remuneration is comfortably the highest figure received by the company’s chief executive in the past decade, beating the £5.4 million he received the previous year.

What’s in the new remuneration policy? No material changes are planned for the policy last approved by shareholders at the 2021 AGM with a vote of over 95%. The company has updated performance metrics for 2024 to reflect the second phase of its strategy, which is focused on delivering stronger and more consistent performance in both conventional tobacco and next generation products. The remuneration committee is also proposing to reduce the level of bonus deferral, but only where the minimum shareholding has been met.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report and also support the binding resolution on the new three-year remuneration policy. 

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 proportion of women on the board at the end of September remained at 40%, including the roles of chair and senior independent director. Two directors identify as being from an ethnic minority background.

Sage

When: 12 noon, Thursday 1 February.

Where: 5 & 6, Cobalt Park Way, Cobalt Park, Newcastle Upon Tyne, NE28 9EJ.

How to participate: There is no digitally enabled meeting platform at this year’s AGM due to limited uptake at previous meetings. Pre-meeting questions should be sent to agm2024@sage.com no later than Monday, 22 January. The deadline for proxy voting instructions is 12 noon, Tuesday 30 January. More AGM details can be found here.

Who’s in the chair? Andrew Duff has held the role since October 2021. The former chief executive of npower was chair of Severn Trent between 2010 and 2020.

How did the company do in the year to 30 September? The accounting software business increased underlying revenues by 10% to £2.18 billion, driven by broad-based growth in cloud solutions across the group. Operating profit lifted by 18% to £456 million and underlying earnings per share by 22% to 32.3p. A final dividend for the year of 12.75p will be paid on 9 February, increasing the total dividend for 2022/23 by 5% to 19.3p. 

How have shares performed? Up 42% to 989p (1,156p on Thursday).

How much is the boss paid? Steve Hare, who was appointed in November 2018, has received a 9.9% increase in base salary for this year to £925,000. His total remuneration for 2022/23 amounted to £4 million, the highest sum received by the company’s chief executive in the past decade. The overall figure included an annual bonus of £993,000 based on 68% of the maximum opportunity and £2 million from the 73.1% vesting of long-term incentives.

What’s the rationale for the salary increase? The company felt Hare’s pay arrangements were uncompetitive for a high-performing CEO in a FTSE 50 technology business with significant presence in the US and operating in a US-dominated industry, where total levels are significantly higher than in the UK. Since his appointment Sage has significantly outperformed with 98% return to shareholders compared to 30% from the FTSE 100 Index. Over £6 billion of shareholder value has been created over this five-year period and Sage is now a constituent of the FTSE 50. As well as his first above inflationary increase in salary, Hare’s long-term incentive award is to move from 250% to 300% of salary. The remuneration report said: “Whilst these changes do not significantly close the gap with our US competitors, they bring the CEO’s remuneration opportunity closer to a UK mid-market position, which the committee currently views as an acceptable position.” 

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What’s the view of voting agencies? Glass Lewis believes the proposed increase in salary and total opportunity levels for the CEO remain reasonable relative to domestic peers, and notes they are within the maximum permitted under the company’s remuneration policy. It recommends shareholders vote in favour of the annual remuneration report.

How did last year’s AGM go? The annual remuneration report was approved with 98.77% of votes in favour.

How’s the company doing on diversity? Recent changes mean at least 40% of the board is female, while the company meets the recommendation of the Parker Review to have at least one director from an ethnic minority background.

WH Smith

When: 11.30am, Friday 26 January.

Where: Herbert Smith Freehills, Exchange House, Primrose Street, London EC2A 2EG.

How to participate: Proxy voting instructions must be returned no later than 11.30am, Wednesday 24 January. More AGM details can be found here.

Who’s in the chair? Former Direct Line chief executive Annette Court was appointed in December 2022.

How did the company do in the year to 31 August? Strong growth in the travel division meant WH Smith (LSE:SMWH) revenues rose 28% to £1.8 billion, resulting in a 96% increase in headline profit to £143 million and underlying earnings per share up 93% to 80.3p. Pre-tax profits of £110 million compared with £63 million the year before. A final dividend of 20.8p a share is due to be paid on 1 February, making a total for the year of 28.9p.

How have shares performed? Up 3% to 1,467p (1,252p on Thursday).

How much is the boss paid? Carl Cowling’s 2022/23 total remuneration amounted to £2.9 million, the highest figure since his appointment in November 2019. On top of his base salary of £610,000, he got £998,000 after receiving the full bonus opportunity for the second year in a row. More than half of this figure will be deferred into shares. Long-term incentives vested for the first time since the pandemic, generating £1.25 million based on 65% of the maximum. The vesting percentage was determined solely by the growth in the company’s total shareholder return relative to the FTSE All Share General Retailers sector over the three-year performance period. This was set in November 2020 when WH Smith was significantly impacted by the effects of Covid-19.

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What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How did last year’s AGM go? The annual remuneration report was approved with 99% of votes in favour.

How’s the company doing on diversity? One of the four senior positions is held by a woman, with overall board representation 63%. The board composition includes one director from an ethnic minority background.