Pirc warns Aggreko chief Soames’ pay ‘excessive’

ONE of Britain’s biggest shareholder advisory groups has branded Aggreko chief executive Rupert Soames’ pay packet as “excessive” after he received shares worth £7.1 million under a long-term incentive plan.

Pensions & Investment Research Consultants (Pirc) has called on shareholders to abstain from voting on the Glasgow-based company’s remuneration report at its annual general meeting on 25 April.

Soames received a total of just over £8m for 2012, up 36 per cent year on year, the consultancy said, despite his bonus dropping to just £51,000 from £638,000. His basic pay edged up by 6 per cent to £647,500.

Pirc, which advises institutional investors with assets worth more than £1.5 trillion, has also raised concerns about chairman Ken Hanna’s “time commitments” and suggested abstaining from his re-election. Hanna is also chairman of car retailer Inchcape and a non-executive director at supermarket giant Tesco.

The consultancy said: “There are concerns over incentive award arrangements insofar as they are too narrowly focused on the company’s diluted earnings per share results.

“The long-term incentive plans apply the same performance criteria, which potentially rewards executives twice for achieving the same outcomes.”

Pirc added: “Whilst salaries are below median for the sector, combined awards are considered excessive in both potential and actual terms.

“The chief executive received variable pay during the year representing more than 1,100 per cent of salary, which is considered to be wholly excessive.”

Underlying pre-tax profits at Aggreko – which supplied temporary power to the Olympic Games in London – rose by 11 per cent in 2012 to £365m on the back of a 13 per cent increase in turnover to £1.6 billion.

Shareholders will be asked at the AGM to approve a 15 per cent increase in the total dividend to 23.91p a share.

A spokesman for Aggreko said: “Our remuneration policy adheres to modern best practice and Pirc’s comments are wholly unrepresentative of the views of the substantial majority of our shareholders.”

The company also highlighted a report from investor advisory body ISS, which recommended shareholders vote in favour of the remuneration report.