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Arrow Global and Informa next in the firing line on executive pay after AstraZeneca furore

Après Soriot, le déluge? Institutional investors have been cutting up rough more than usual this year over executive pay, although they have yet to win a significant victory.

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After the almighty ding-dong over executive pay at AstraZeneca PLC (LON:AZN) earlier this month, two more high-profile companies are in the firing line over their executive pay schemes.

Legal & General Investment Management, according to Sky News, is unhappy with the pay awards to management at Arrow Global Group PLC (LON:ARW) and Informa PLC (LON:INF).

Legal & General Investment Management (LGIM) holds a 4.51% stake in Arrow, an alternative asset manager specialising in non-performing and non-core assets that is in the process of being taken over by Sherwood Acquisitions, a newly formed company owned by investment funds managed by TDR Capital.

Sky News reports that the bid by Sherwood, which was backed by the Arrow Global board, will see Arrow’s chief executive, Lee Rochford, trouser £3mln when the takeover triggers clauses in his long-term incentive plan (LTIP).

LGIM called the early crystallisation of management’s LTIP bonuses a “windfall gain”. It intends to vote against the re-election of the chairman of Arrow's remuneration committee at the Arrow annual general meeting (AGM) next Wednesday.

As for Informa PLC (LON:INF), the events organiser and business publisher, LGIM intends to vote against the re-election of all three members of the remuneration committee at the company’s AGM, which will be held next Thursday.

The company’s business was hit hard by the lockdowns, with revenues collapsing to £1,661mln in 2020 from £2,890mln in 2019.

LGIM effectively accused the Informa remuneration committee of moving the goalposts by adjusting the performance conditions for an existing LTIP while the plan was still running; this resulted in LTIP plans vesting (i.e. free or cheap shares) where otherwise they would have lapsed.

LGIM has been somewhat of a fair pay champion of late, taking the likes of car dealer Pendragon PLC (LON:PDG) and cinemas operator Cineworld Group PLC (LON:CINE) to task for what the asset manager sees as setting bonus targets that are too easily attainable, given that both businesses are set to bounce back after the prolonged lockdown period. The investment management firm has taken the view that it is morally wrong for management to harvest huge bonuses while the company they manage has been laying off staff or accepting government aid during the pandemic, or both.

The daddy of all pay rows this year, however, has been at drugs giant AstraZeneca where around 40% of the votes were cast against the revisions made to the performance-related bonuses in chief executive Pascal Soriot’s incentive plan. That was not enough for AstraZeneca to think again and say “sorry-o” but it did put a dent in the company’s reputation, which had been enhanced – in Britain, if not in mainland Europe – by the company making its COVID-19 vaccine available at cost to health organisations.

The adjustment to the AstraZeneca boss’s pay policy could see him earn up to 2.5 times his salary as a bonus in 2021, up from 2 times his salary previously.

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