Cineworld PLC (LON:CINE) is facing a revolt from one of its major shareholders as City stalwart Legal & General Investment Management (LGIM) said it plans to vote against the re-election of the company’s chairman, Alicja Kornasiewicz, and its entire remuneration committee at the cinema chain’s AGM next week.
In a blog post published on Thursday outlining its voting intentions, LGIM said it has chosen to “escalate its position” amid “strong concerns about the structure of the long-term incentive plan granted to the executives, and its misalignment with the long-term interests of the company, its shareholders and other stakeholders”.
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“In particular, we note the impact of COVID-19 on the company’s financials and stakeholders, including furloughs for employees and the suspension of dividends. We also take into account the current social sensitivities around income inequality”, LGIM said.
The outfit said it previously flagged concerns about the pay package at a special shareholder meeting in January, adding that despite a “significant” percentage of investors, over 20%, voting against the payout plans it has received a “lack of response from the company’s remuneration committee and board”.
The outcry from the institutional investor over the payment package, which will see its top two executives rake in around £60mln in bonuses, comes amid growing anger with Cineworld’s management for enriching themselves despite presiding over massive losses at the group during the pandemic, where lockdown measures forced its branches to close and sent its share price tumbling.
Before COVID-19 took hold, Cineworld shares were trading at around 180p, as of Wednesday’s close, it was trading at just over half that at 93p.
LGIM is also not the only organisation opposing the company’s board, with proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis having also recommended that shareholders vote against the firm’s pay policy back in January.
The standoff also comes at an awkward time for Cineworld as it prepares to reopen its sites in the UK on May 17 as part of the next step of lockdown easing.
Shares in the group were down 1.1% at 91.7p in late afternoon trading on Thursday.