Will new pay policy please fed-up shareholders at FTSE 100 star?

Directors at this high-performing blue-chip hope action taken to modify pay practices will avoid another showdown with investors. Two other companies also put their remuneration reports to the vote.

Retail giant JD Sports Fashion (LSE:JD.) will be hoping its adoption of pay practices more in keeping with the FTSE 100 norm ends a long run of AGM protest votes.

Following long-standing shareholder concerns about the use of cash-based incentives, it has introduced a new policy where some 50% of total remuneration is paid in shares for an on-target performance compared with 20% previously. 

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The company’s AGM takes place on the same day as fellow blue-chip stock Kingfisher (LSE:KGF), whose boss Thierry Garnier received a pay package of £1.9 million for 2022/23.

Kingfisher

When: 2pm, Tuesday 27 June.

Where: Storey Club, 4 Kingdom Street, London W2 6BD.

How to participate: The deadline for proxy voting instructions and the submission of questions to shareholder.enquiries@kingfisher.com is 2pm, Friday 23 June. Unlike in 2022, there will be no facility to watch the meeting online. More AGM details can be found here.

Who’s in the chair? Andrew Cosslett, the former InterContinental Hotels boss who has been in the role since June 2017.

How did the company do in the year to 31 January? The performance against strong prior year comparatives showed sales at the B&Q, Castorama and Screwfix owner down by 0.9% to £13.06 billion and adjusted profits 20% lower at £758 million. Basic earnings per share fell 41% to 23.8p, or by 15.6% to 29.7p on an adjusted basis. A final dividend of 8.60p a share is due to be paid on 3 July, resulting in an unchanged total for the year of 12.40p.

How have shares performed? Down 16% to 279p (240.7p on Thursday).

How much is the boss paid? Thierry Garnier’s salary has increased 5% to £882,525, effective from April. His remuneration for 2022/23 amounted to £1.94 million, including £265,200 after the bonus scheme paid 15.9% of the maximum opportunity based on the metrics for like-for-like sales and own-brand sales growth. Neither adjusted pre-tax profit or digital sales growth met the target. Shares awarded in 2020 vested in their entirety at a value of £680,000, reflecting the achievement of a net debt to earnings ratio less than 2.5 times, dividend cover over 1.75 times and dividend payments in 2022/23 above the required threshold.

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How did last year’s AGM go? The binding vote on the new three-year remuneration policy received 93.11% support. The plan increased the annual bonus opportunity for the chief executive to 200% of salary, with anything over 100% of salary deferred into shares for three years. The maximum opportunity under the new Performance Share Plan is 275% of salary, subject to performance over three years and with a further two-year holding period. The annual remuneration report was approved with 96.36% of votes cast in favour.

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

How’s the company doing on diversity? The company has four female directors (44%) and one director from a minority ethnic background.

JD Sports Fashion

When: 9am, Tuesday 27 June.

Where: Addleshaw Goddard, One St. Peter’s Square, Manchester, M2 3DE.

How to participate: Proxy voting instructions need to be returned no later than 9am, Friday 23 June. Questions in advance of the meeting should be sent to AGMenquiries@jdplc.com by a deadline of 9am, Tuesday 20 June. More AGM details can be found here.

Who’s in the chair? Andrew Higginson, who was appointed last July, previously held senior leadership roles at Tesco over a period of nearly 15 years and was chair of Morrisons from January 2015 until its private equity takeover in November 2021.

How did the company do in the year to 28 January? Total revenues rose to £10.12 billion from £8.56 billion, reflecting 12% growth in organic sales at constant exchange rates. Adjusted profits rose 5% to a new record of £991.4 million but one-off items relating to the divestment of non-core UK fashion businesses and costs associated with closing South Korea operations led to a lower bottom-line figure of £440.9 million. Basic earnings per share fell from 7.17p to 2.76p, although a figure of 13.3p on an adjusted basis was stronger than 12.84p the previous year. A dividend of 0.67p a share is due to be paid on 4 August, resulting in a total for the year to 0.80p compared with 0.35p the year before.

How have shares performed? Down 15% to 161.6p (151p on Thursday).

How much is the boss paid? The salary of Régis Schultz has increased by 6% from his September starting point of £990,000 to £1.05 million effective from 1 April. A one-off allowance of £300,000 as part of a relocation package from Dubai to the UK and a buyout award of shares worth £2.17 million in respect of the cash annual bonus he forfeited from his previous employer meant Schultz’s total remuneration for 2022/23 amounted to £2.9 million.

What about other directors? Neil Greenhalgh, who is stepping down this summer after two decades with the group and five years as finance boss, got a total of £1.9 million in 2022/23. This included an annual bonus of £648,720 based on 72% of the maximum opportunity and  £648,544 through the 86.5% vesting of shares granted in 2020. Peter Cowgill got a total of £703,000 prior to leaving the group in May. The former executive chairman is entitled to a salary of £303,000 relating to the current financial year to January 2024.

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How did last year’s AGM go? The annual remuneration report was passed with 72.29% of votes in favour, following on from the previous year’s 68.5% support. JD said the significant dissent reflected long-standing shareholder concerns around the use of cash-based incentives in the remuneration structure.

How has the company responded? A refreshed executive pay approach has brought the company in line with FTSE 100 market practice. It has also focused on the need to attract, retain and motivate retail talent at a company where 30% of revenues are in the United States. JD said it will pay market-aligned remuneration for delivering consistent performance, with the ability to earn above market levels if performance warrants it. Given the urgency to deliver improved corporate governance, a new pay policy was put before a general meeting in December and approved with over 99% of votes in favour. The changes include the deferral of 50% of any bonus into shares for a minimum of three years and a long-term incentive structure delivered wholly in shares, with a two year post-vesting holding period.

What’s the view of voting agencies? Glass Lewis recommends support for the annual remuneration report, stating that the company’s executive compensation policies and structure appear to be in line with best practice guidelines.

How’s the company doing on diversity? Board gender diversity stood at 44% at the end of the financial year. The company meets the recommendations of the Parker Review by having at least one director from an ethnic minority background.

Morgan Advanced Materials

When: 10.30am, Thursday 29 June.

Where: Slaughter and May, One Bunhill Row, London EC1Y 8YY.

How to participate: Questions in advance of the Morgan Advanced Materials (LSE:MGAM) meeting should be sent to company.secretariat@morganplc.com by 5pm, Monday 19 June. This will ensure that answers are published before the proxy voting deadline of 10.30am, Tuesday 27 June. More AGM details can be found here.

Who’s in the chair? Douglas Caster is due to stand down after the AGM, having been a director since 2014 and chair since January 2019. Former SSE chief executive Ian Marchant joined the board as chair designate with effect from 1 February.

How did the company do in 2022? Revenues at the FTSE 250-listed company reached £1.11 billion, up 17% on the back of continued strong demand across all business units. Pre-tax profits rose 26.2% to £131.6 million and basic earnings per share from continuing operations lifted to 30.6p from 23.9p the previous year. A final dividend of 6.7p a share is due to be paid on 3 July, resulting in the total for the year improving 31.9% to 12p a share. The results were published later than usual after the company suffered a cyber attack in early January. The incident has resulted in a £15 million hit from the recovery of systems and specialist support, and a 10-15% reduction in operating profit for 2023 compared with earlier City forecasts.

How have shares performed? Down 14% to 314.5p (282.5p on Thursday).

How much is the boss paid? Pete Raby received a 4% pay rise in January, taking his base salary to £620,000. Total remuneration for 2022 amounted to £1.66 million, the second highest figure in his eight years as chief executive and only exceeded by the £2 million awarded the previous year. Whereas 2021’s bonus came to 97% of the maximum opportunity, last year’s was 27.6% or £246,708 after the threshold on cash generation was missed. The 67.94% vesting of long-term incentives granted in 2020 contributed £696,494 to the final figure.

How did last year’s AGM go? The binding vote on the new remuneration policy was approved with 96.45% of votes in favour, while the annual remuneration got 99.27% support.

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

How’s the company doing on diversity? There was 43% female board representation at the end of 2022, one of whom is the senior independent director, and the company currently has one director of Southeast Asian origin.