Morrisons chairman '˜surprised' by shareholder revolt
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Chairman Andy Higginson said he was “surprised” by the result, which saw 48.11 per cent of shareholder votes cast against the remuneration report, which looks back at the way that the company’s pay policy has been applied over the past year.
Only 51.89 per cent voted in favour at the retailer’s annual general meeting.
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Higginson said: “We consulted widely with shareholders on the new remuneration policy which received strong support with more than 92 per cent in favour so we were surprised not to get a higher vote in favour of the directors’ remuneration report.”
Shareholder advisory group Institutional Shareholder Services (ISS) had urged shareholders to reject the report, arguing that performance targets for Potts were too low, while increases to the long-term incentive plan (LTIP) award were above average.
Morrisons’ remuneration committee had outlined plans to increase the potential LTIP award from 240 per cent of director salary to 300 per cent.
If the LTIP and other award targets were met – including those for free cash flow, sales and earnings per share growth – it would result in Potts receiving a total pay package of £5.3 million in 2020, compared to the £2.79m he received for 2016/17.
Higginson said he “fundamentally disagreed” with ISS’ assessment of the company’s targets.
“Not only does the board believe the targets to be significant and stretching, but the judgement on what the right measures are goes to the heart of rebuilding the business for the long term – striking the right balance between investment in the business and continued outperformance,” he said.
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Morrisons’ remuneration policy, which outlines the way the company intends to reward its executives over the coming years, passed by 92.35 per cent. However, 7.65 per cent of votes were cast in opposition to the policy.
The vote for the remuneration report was not binding, though a shareholder rebellion against the policy would have forced the company to make changes to its director pay plans.
Morrisons earlier this year reported a 49.8 per cent jump in pre-tax profits to £325m while revenue rose 1.2 per cent to £16.3 billion, solidifying the chain’s return to form under Potts.
On top of a deal to sell its groceries through online retail giant Amazon, he has ploughed investment into price cuts and called time on under-performing stores in his attempts to turn the page on the supermarket’s ill-fated era under ousted boss Dalton Philips.
His efforts come as the grocery sector’s so-called “big four” – Tesco, Asda, Sainsbury’s and Morrisons – remain locked in a bitter price war sparked by German discounters Aldi and Lidl.