Investors had warned the engineering and technology group Smiths that they were far from pleased about a special £200,000 payment to the chief executive, Philip Bowman, and used today's annual general meeting to show their disapproval.
More than 40% of the shareholders who voted failed to support the remuneration report – a large level of protest for a FTSE 100 company such as Smiths.
The showdown had been on the cards since the Association of British Insurers had issued an "amber top" alert to its members to highlight the cash payment to Bowman.
The payment – an unusual one-off amount that took his total pay deal to £2.3m last year – was revealed in the annual report, which also showed that the company was forced by the ABI to make changes to a previous long-term incentive plan that had only been ratified last year.
The new scheme, which replaces the complex "value sharing plan" that Smiths had wanted to adopt, won the backing of more than 96% of the votes cast the annual meeting.
The same cannot be said of the remuneration report, which showed that 31.5% of investors voted against the pay deals awarded to directors – with the level of disapproval rising to 43% if the deliberate abstentions are included.
The results of the AGM can be found here.
The £200,000 payment for Bowman was made because the company felt he – and four other unidentified participants in a previous bonus plan – had been left out of pocket by the way that earnings per share had been measured. This had cost him £280,000 but he was getting £200,000 to rectify the problem caused by use of pension interest credit (PIC) being included in earlier pay schemes.
The company preferred to focus on the levels of votes against rather than the deliberate abstentions.
Smiths said: "Almost 70% of the votes that count were in favour of the remuneration report. Objections focused solely on the technicality of including PIC in the 2007 long-term incentive scheme that affected the CEO and four other employees.
"In other words, the method rather than the amount. In fact, Philip Bowman's total remuneration fell 10% last year. His re-election as CEO was supported by more than 99% of shareholders and the new incentive scheme by more than 98%. Both are resounding votes of shareholder confidence."
