Multimillion-pound pay deals awarded after firm adjusted calculations to ignore Covid-19 costs
Last modified on Thu 10 Jun 2021 12.39 EDT
Morrisons shareholders have voted overwhelmingly against the award of millions of pounds in bonuses to executives who missed profit targets during the pandemic, in one of the biggest shareholder rebellions of recent years.
The vote is not binding so the chief executive, David Potts, and his two most senior managers will still be able to receive the £9m in pay and bonuses they were awarded, despite a year in which the company fell out of the FTSE 100 and profits halved because of extra pandemic costs.
Morrisons’ remuneration committee, chaired by Kevin Havelock, decided to use its “discretion” and adjust its bonus calculations to ignore Covid-19 costs of £290m.
Potts can collect his full £1.7m bonus, bringing his total pay packet to £4.2m, a 5% increase compared with the year before. The chief operating officer, Trevor Strain, was awarded total pay of £3.2m – including an annual bonus of £1.3m – up 9% year-on-year, while the grocer’s newly installed chief financial officer, Michael Gleeson, was given £1.7m including a bonus of almost £1m.
Only 30% of votes were in favour of the directors’ remuneration report, while 70% voted against, according to the results of a poll at the company’s annual meeting on Thursday.
It was a significant rebuke to the Bradford-based supermarket’s bosses, and the second biggest shareholder revolt on an executive pay issue since the Investment Association started tracking votes in 2017.
In a statement released alongside the results, Morrisons did not mention any plans to adjust the remuneration. It said the committee would continue to make the case for using its discretion “in a genuinely exceptional year which produced a genuinely exceptional performance from the executive leadership”.
The vote was advisory only, meaning executives can keep their pay. A vote on Morrisons’ new remuneration policy at 2022’s annual meeting will be binding.
The Morrisons upset is the latest in a string of rebellions during 2021 over high pay. While many companies have cut back pay pots amid the pandemic, others have decided to retain big payouts to the chagrin of major shareholders.
Investors revolted at estate agents Savills after it also kept bonuses despite falling profits. Its rival Foxtons was censured for keeping a near £1m bonus for its chief executive while refusing to hand back financial support from the government. Cineworld investors objected to big share awards, whileAstrazeneca shareholders took issue with a pay rise for chief executive Pascal Soriot.
Luke Hildyard, the director of the High Pay Centre, which tracks executive pay, said: “Historic failures to bring CEO pay back to the real world are now poisoning investor-company relations in cases such as this.
“If businesses are going to proceed with vast executive pay awards in the face of the challenges presented by the Covid crisis, pressure to reform the pay-setting process, potentially by involving workers’ representatives, will become stronger.”
Potts in March described Morrisons’ profits slump as a “badge of honour” because it reflected the costs of feeding the nation and bringing in extra measures such as cleaning and social distancing costs. Annual profits halved to £201m despite soaring sales, £220m less than required by Morrisons’ pay policy for Potts to receive his full bonus.
Morrisons’ declining share price – as investors looked ahead to continued Covid-19 costs – meant it was dropped from the FTSE 100 index of blue-chip companies for the first time in five years in March.
Morrisons argued that the executives may have missed profit targets, but that they had shown “leadership, clarity, decisiveness, compassion and speed of both decision making and execution”.
“The remuneration committee believed that it was appropriate to apply some discretion to the remuneration of the senior executives,” Morrisons said. “It is a matter of sincere regret to the committee that it clearly has not been able to convince a majority of shareholders – or the proxy voting agencies –that this was the right course of action.”
Potts was re-elected to Morrisons’ board with 99% of the votes. However, there were votes of 16% and 15% respectively against the re-election of Andrew Higginson, the chair of Morrisons’ board, and Havelock, whose committee that approved the payouts.
Source: Read Full Article