Morrisons Shareholders Reject Executive Bonuses Amid Falling Profits

Morrisons Shareholders Reject Executive Bonuses Amid Falling Profits

Morrisons shareholders voted overwhelmingly against awarding millions of pounds in bonuses to executives who missed profit targets during the pandemic, in one of the biggest shareholder rebellions in recent years.

The vote is non-binding and a spokesperson said the management team intended to collect their rewards in full.

Managing Director David Potts and his two senior executives will receive £ 9million in salary and bonuses, despite a year in which the company fell from the FTSE 100 and profits were cut in half due to costs additional pandemic-related.

Morrisons’ compensation committee, chaired by Kevin Havelock, has decided to use its’ discretion ‘and adjust its calculations to ignore Covid-19 costs of £ 290million.

Potts will receive his full £ 1.7million bonus, bringing his total salary to £ 4.2million, a 5% increase from the previous year. COO Trevor Strain received a total salary of £ 3.2million – including an annual bonus of £ 1.3million – up 9% year on year, while the The grocer’s newly installed chief financial officer, Michael Gleeson, received £ 1.7million. , including a bonus of almost £ 1million.

Only 30% of the vote was in favor of the directors’ compensation report, with 70% against, according to the results of a poll at the company’s annual meeting on Thursday.

This was a major rebuke to the bosses of the Bradford supermarket and the second biggest shareholder revolt over an executive compensation issue since the Investment Association began tracking votes in 2017.

In a statement released with the results, Morrisons did not mention any plans to adjust compensation. He said the committee would continue to advocate for the use of its discretion “in a truly exceptional year which has produced a truly exceptional performance from the executive management”.

The vote was advisory, which means executives can keep their pay. A vote on Morrisons’ new compensation policy at the 2022 annual meeting will be binding.

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The Morrisons upheaval is the latest in a series of rebellions in 2021 against high wages. While many companies have cut wages amid the pandemic, others have decided to keep the big payments, much to the chagrin of major shareholders.

Investors revolted against Savills realtors after also keeping bonuses despite falling profits. Rival Foxtons has been censored for retaining a bonus of nearly £ 1million for his chief executive while refusing to hand over government financial support. Cineworld investors opposed the large share awards, while Astrazeneca shareholders challenged a salary increase for chief executive Pascal Soriot.

Luke Hildyard, director of the High Pay Center, which tracks executive compensation, said: “Historic failures to bring CEO compensation back to the real world are now plaguing investor-company relationships in cases like this. If companies are going to make sweeping salary rewards for executives in the face of the challenges posed by the Covid crisis, the pressure to reform the wage setting process, potentially involving worker representatives, will become stronger. “

Potts in March described Morrisons’ drop in profits as a “badge of honor” as it reflected the costs of feeding the nation and of introducing additional measures such as cleanup costs and social distancing. Annual profits were cut in half to £ 201million despite the surge in sales, £ 220million less than required by Morrisons’ compensation policy for Potts to receive his full bonus.

Morrisons’ share price decline – as investors anticipated continued costs of Covid-19 – knocked it out of the FTSE 100 blue-chip companies index for the first time in five years in March .

Morrisons argued that the leaders may have missed their profit targets, but they had shown “leadership, clarity, determination, compassion, and quickness in both decision-making and decision-making. execution ”.

“The compensation committee felt it was appropriate to apply some discretion to executive compensation,” Morrisons said. “The committee sincerely regrets that it has clearly not been able to convince a majority of shareholders – or the proxy voting agencies – that this was the right course of action. “

Potts was re-elected to Morrisons board with 99% of the vote. However, there were votes of 16% and 15% respectively against the re-election of Andrew Higginson, the chairman of the board of Morrisons, and Havelock, whose committee approved the payments.


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