It’s deja vu all over again. When the shareholders of gambling company GVC meet in Gibraltar for the firm’s AGM this week, there is expected to be a rebellion over bloated executive pay packets.
Chief executive Kenny Alexander has been awarded £45m in share options since 2016 while chairman Larry Feldman has picked up share options worth £22.5m, thanks to a scheme linked to the firm’s share price, which recently hit an all-time high. The pay levels have prompted outrage from a section of shareholders who have been advised to vote against the pay report of the FTSE 250 company, which owns Ladbrokes Coral and Foxy Bingo and has its headquarters on the Isle of Man.
But will it make a difference? Voting against executive pay has become something of a given at AGMs this year, as has the failure of such efforts.
Last month, AstraZeneca faced the wrath of investors when over a third of them failed to back the pharmaceuticals giant’s remuneration report. The rebellion opposed a £9.4m pay package for chief executive Pascal Soriot, even though this was a reduction from £14.3m a year earlier.
One of the biggest rebellions of the year came at turnaround specialists Melrose when almost 27% of shareholders who voted at its annual meeting in May failed to back its pay report, with leading City institution and top-20 shareholder Standard Life Aberdeen among the rebels.
That vote came amid disgruntlement over a decision to pay a £42m incentive scheme payout to each of four directors, but failed to stop the payments as they have already been made and shareholders are powerless to stop payments because the votes are only advisory. However, it was seen as a rap on the knuckles for a decision to hand out £167m to just four men – the executive chairman, Christopher Miller, the executive vice-chairman, David Roper, the chief executive, Simon Peckham, and the group finance director, Geoffrey Martin – and the company said it would review the existing remuneration arrangements.
At the beginning of May, insurance group Direct Line had a shareholder rebellion when 23% voted against directors’ pay. That focus was on the £657,000 basic pay awarded to new finance director Penny James, whose pay is 38% more than her predecessor’s.
At about the same time, 37.6% of shareholders voted against the Bovis remuneration report after a controversy over the pay package it awarded its interim chief executive. But, again, the revolt failed to stop the report, which was passed with the backing of 62.4% of the voters.
Shortly before that, shareholders in housebuilder Persimmon had revolted against what was described as the excessive and unjustifiable £75m bonus paid to chief executive Jeff Fairburn. The company’s annual meeting saw shareholders get to their feet to show their outrage at the sums paid to him and other senior managers. In a vote, 64% of shareholders failed to support the payout.
However, despite the investor anger, the pay policy was approved, as almost a third of shareholders abstained from the vote, and of those who voted, 51.5% cast in favour and 48.5% against.
The annual meeting in Gibraltar this week will be the second time that executive pay has been questioned by GVC shareholders. Last year, 45% of investors failed to support the pay policy.
Judging by the experience of other AGMs so far this year, Alexander and Feldman may not be too concerned about their wages.
•This article was amended on 4 June 2018 to clarify that the £42m payment t0 Melrose directors was under an incentive scheme
