The biggest shareholder revolt over pay at a FTSE 100 company so far this year took place on Monday when almost 40% of investors failed to support a $4m (£2.5m) share award for the chief executive of mining company Randgold Resources.
The "career shares" award for Mark Bristow was put to a vote in addition to the remuneration report at the annual meeting held in Jersey. A number of agencies which advise major institutions how to vote had recommended opposing the share award.
The South African-born founder of Randgold, which was listed on the London Stock Exchange in 1997, received the award of shares on top of a $1.5m salary and bonuses which inflated his pay to $7m. The award vests after three years provided he remains with the company and certain performance criteria fulfilled.
"It is considered that this excessive award serves only to reward for the continued normal operation of the company, and therefore falls far short of best practice," said Pirc, which advises pension funds on how to vote at annual meetings.
After last year's shareholder spring, when a record number of remuneration reports were voted down, the voting patterns at this year's annual meetings are being closely monitored. According to the advisory body Manifest the 39% vote against Bristow's share award was the largest protest over pay at a FTSE 100 company so far this year. One of the remuneration reports voted down last year was caused by a rise for Sir Martin Sorrell, the chief executive of advertising company WPP which is expected to publish its annual report (tues)on Tuesday showing that he has agreed to take a cut in an attempt to avoid another protest. The WPP annual report is expected to include an £11m payout he received from the company's long-term incentive plans last year.
At Randgold Resources, the non-executive director who chairs the remuneration committee, Norborne Cole, said in the annual report that the shares needed to be awarded to Bristow because of his "outstanding contribution". Cole, a former Coca-Cola executive, added: "Through this past decade of long term shareholder value reaction our CEO has delivered exceptional results and leadership for Randgold. We want to recognise this contribution and motivate the CEO going forward to deliver further value creation for shareholders and the company at this critical point in its history."
The company's stock market value has risen from $335m at the time of its flotation in 1997 to $7.4bn now.
The ten largest shareholders control 49.33% of the company, the largest being Blackrock which owns a 14% stake. Some 27% of the shares are held by UK-based investors and 43% by those based in the US.
A spokeswoman for the board said: "Considering that several of the proxy agencies advised shareholders to oppose the award the board is gratified that a large majority of shareholders recognised the merits of the award."
