The whiff of revolution is in the City air this month as shareholders look to voice their displeasure at some of the hefty pay and bonuses being dished out left, right and centre.
This week there will be annual shareholder meetings for a couple of banks, Metro Bank PLC (LON:MTRO) and Lloyds Banking Group (LON:LLOY), plus there is expected to be smelling salts at hand for directors at G4S PLC (LON:GFS) and Standard Life Aberdeen PLC (LON:SLA).
Metro faces queues and questions
Metro Bank came eyeball-to-eyeball with a customer rebellion this week, after worrisome rumours about its financial stability, and next week the challenger bank is likely to come face to face with some similarly unhappy investors.
Ahead of its AGM on 21 May, shareholder advisory groups have urged investors to reject the FTSE 250 lender’s remuneration report and to abstain in the votes on the re-election of four directors, including chairman Vernon Hill and chief executive officer Craig Donaldson.
Notifying investors about the get-together, founder Hill insisted they “meet with the directors and express your views by attending, raising questions and voting”. The American may get more than he bargained for.
Directors at Centrica Plc (LON:CAN) got markedly less than some were hoping for at the start of the week, however, despite trade unions branding CEO Iain Conn’s 44% pay rise “obscene” and “frankly staggering”.
There were loud protests at the British Gas owner’s AGM but the most vociferous were over climate change issues and fuel poverty, with the group’s remuneration report was opposed by just 15%.
The bonus came despite the company’s shares have fallen by two thirds in his reign, while he has halved debt thanks in part to trimming the dividend payout, cutting costs and around 10,000 jobs over his four years in charge. Conn, whose pay is equivalent to 120 times that of a British Gas customer service worker, was re-elected with a 99.4% vote.
Bash a banker?
Maybe it the banking sector, seen by many as providing the tinder and the spark for the financial crisis, where investor feeling runs higher.
Barclays PLC (LON:BARC) ducked and weaved a challenge from activist investor Edward Bramson at its recent AGM but walked into a jab on the nose from shareholders over director pay.
Almost 30% of investors voted against its remuneration report at the start of this month, where chief executive Jes Staley’s pension and bonus were bones of contention as the American banker’s pension was set at nearly 30% of his annual cash pay.
Fellow FTSE 100 lender Standard Chartered PLC (LON:STAN) got a bigger bloody nose, with more than 36% of votes cast against its new remuneration policy after objections were raised by ISS and similarly influential investor advisory firm Glass Lewis.
The effectiveness of this tactic will be on show for Lloyds this week as it hold its AGM on Thursday, an event that last year saw a fifth of votes against its remuneration policy.
Even though the move seemed to work for HSBC last month, so worried does Lloyds appear to be about the AGM votes, especially a row over CEO António Horta-Osório’s retirement arrangements, that the bank has been encouraging its ordinary staff to vote at the meeting, with a video reportedly sent to employees advising the importance of exercising their vote.
Horta-Osório receives a third of his salary as a cash payment in lieu of pension, which dwarfs the 13% that non-boardroom staff are offered.
As well as Lloyds this Thursday, warning lights have been flashing for the G4S annual meeting. Ashley Almanza, boss of security group, has also received payment in lieu of pension equivalent to a quarter of his base pay, far greater than the small contribution given to the rank and file employees. The Investment Association has flagged concerns to its institutional members about the payment.
Ahead of that, there’s meetings for Standard Life Aberdeen on Tuesday, facing objections from ISS over the “significant award of shares” granted to its incoming finance chief, and on Wednesday it’s Jupiter Fund Management PLC (LON:JUP), Paddy Power Betfair plc (LON:PPB) and William Hill PLC (LON:WMH).
Early next month a rebellion has been tipped at Ladbrokes and Sportingbet owner GVC Holdings PLC (LON:GVC), which last year saw a 44% opposing vote over pay, with one director on the remuneration committee stepping down after the AGM. could also see objections raised.
GVC’s annual report showed that the chief executive and chairman received £19.1mln and £8.5mln respectively, with their basic salaries boosted share awards worth more than £16mln and £8mln.