Institutional Shareholder Services (ISS) said the beleaguered retailer faced “many challenges”, some of which were company specific and some were sector wide.
“Given the above and in the light of the company’s performance, the payment of an annual bonus in excess of £1M to the departing ceo [Philips], all in cash, appears to be severely out of line with the experience of shareholders over the past year,” said an ISS report on the retailer.
‘Disconnect between pay and performance’
“In summary, it is not considered appropriate to support the [remuneration] report on this occasion, primarily due to the disconnect between pay and performance,” it said.
ISS advised shareholders to vote against approval of the remuneration report, noting: “Due to the apparent pay for performance disconnect in relation to annual bonus awards to senior executives for the year under review, a vote against the remuneration report is warranted.”
An ISS spokeswoman told FoodManufacture.co.uk that ISS research and vote recommendations were one resource its clients used to make their voting decisions. “Clients ultimately make their own final voting decisions according to their own investment and governance philosophy and company engagement activities in any particular situation.”
Meanwhile, the retailer is said to be bracing itself for protests at its Bradford headquarters agm on Thursday June 4. Up to 20% of votes could oppose the retailer’s pay report, according to one media report.
“Due to the apparent pay for performance disconnect in relation to annual bonus awards to senior executives for the year under review, a vote against the remuneration report is warranted.”
Pay off of £1.1M
The separation packaged paid to Philips, which included: a pay off of £1.1M, a bonus of £1M together with his basic salary of £850,000 and a £239,000 pension and benefits plan.
Last year’s agm on June 5 was dominated by the outspoken intervention of former chairman Sir Ken Morrison. After listening to Philips outline his recovery strategy for the business, Sir Ken famously dismissed it as “bullshit,” to applause from shareholders.
“When I left work and started working as a hobby, I chose to raise cattle,” said Sir Ken. “I have something like 1,000 bullocks and, having listened to your presentation, Dalton, you’ve got a lot more bullshit than me.”
Sir Ken and his family were reported to have lost about £167M last year, as the value of their shares in the retailer plunged. Last year the retailer’s profit fell by 52% to £345M.
Last month Morrisons’ posted like-for-like sales, excluding fuel, down by 2.9% in the 12 weeks to May 3, as it battled strong competition from the other top four retailers – Tesco, Asda and Sainsbury – and discount stores Aldi and Lidl.
Philips’ successor, former Tesco executive David Potts has been widely praised by City analysts since taking over the helm four months ago.
Dalton Philips’ pay off
- Separation pay off of £1.1M
- Bonus of £1M
- Basic salary of £850,000
- £239,000 pension and benefits plan.