LONDON BRIEFING:REVOLTS OVER boardroom pay are nothing new – those with long enough memories will recall the strange spectacle, 14 years ago, of a 30-stone pig named Cedric being paraded outside a British Gas shareholder meeting in protest at directors' "snouts in the trough".
Cedric (who, incidentally, later turned out to be a sow) was named after the British Gas chief executive Cedric Brown, who raised the ire of investors after being awarded an annual salary of £475,000 in 1994. The pig was brought along to the meeting by unions outraged at the excess in the BG boardroom.
Cedric (Brown, that is) kept his job and his salary, however, although angry shareholders prolonged the company’s annual meeting for almost five hours as they bombarded the board with complaints. Brown was labelled “Atilla the Hun” and one shareholder even suggested he go and gas himself.
These days, the animal rights lobby would almost certainly object to the use of a pig for an agm protest, and rightly so, but there does seem to be a new mood of militancy spreading through the massed ranks of shareholders.
The very real sense of national outrage caused by the revelations over MPs’ expense claims is fuelling the current backlash over corporate pay.
Public revulsion at the massive pay and pension package for disgraced banker Sir Fred Goodwin has been well documented, but Royal Bank of Scotland is just one of a growing number of companies now under the spotlight over pay.
Oil giant Royal Dutch Shell last week suffered one of the biggest protest votes ever recorded at an annual meeting, as almost 60 per cent of its shareholders voted down plans to pay millions of pounds in bonuses to senior executives, despite the company having failed to meet its performance targets.
Shareholders have also staged rebellions at the annual meetings of the fashion retailer Next and the stockbroking firm Evolution.
At Cable Wireless, unions are protesting at payouts that will see the company’s top 60 managers share a £70 million (€80 million) bonus pot.
The next company likely to come under attack from shareholders is WPP, which is asking shareholders to approve a five-year scheme that could see chief executive Sir Martin Sorrell scoop as much as $95 million (€68 million). The advertising group has moved its headquarters to Ireland in protest at the UK’s corporate tax regime and the annual meeting next Tuesday is being held at the Four Seasons Hotel in Ballsbridge.
The Association of British Insurers, which advises fund managers, has given its members a “red top” warning on WPP, saying they should look closely at the scheme, and its “unique” structure, before deciding whether to approve it.
At Shell, meanwhile, shareholder activists are now demanding that the bonuses paid to directors be handed back. There have also been calls for the resignation of Sir Peter Job, who heads the oil giant’s remuneration committee. However, as at RBS, there is no evidence yet that the Shell directors are suffering any pangs of conscience.
For a moment yesterday, it looked as though one of the oil giant’s executives might have heeded the message of the shareholder revolt. A brief statement from the group revealed the resignation of Linda Cook, the long-serving head of Shell’s gas and power operations.
Shell refused to explain the departure but, rather than stepping down in shame over the bonus payouts, it seems Cook is quitting after being passed over for the top job at the oil giant and is forgoing a “loyalty” payment of about £800,000 in the process.
The top job at the oil group went to Peter Voser. The loyalty bonus was awarded to Cook on the understanding that she stay on under the new chief executive until 2011. Even the Shell remuneration committee wouldn’t have dared to waive that.
Fiona Walsh writes for the Guardian newspaper in London
