Executive pay deals waved through

14th Jul 2010 16:56

After the shenanigans at Tuesday's annual general meeting (AGM) for British Airways Wednesday's AGM for retailer J. Sainsbury was a relatively civil affair, although the thorny issue of executive remuneration raised its head, as expected. Chief executive Justin King, whose remuneration package last year has been calculated at almost £8m, was re-elected as a director with 98% of the vote, but not before some shareholders had expressed dismay at the company's performance, especially in comparison with that of Tesco, the company that long ago usurped Sainsbury position as Britain's largest supermarket chain."The phrase of the day is pay restraint. This remuneration committee doesn't know the meaning of the word," claimed one disgruntled investor. Another accused Sainsbury's incentive scheme of having "vague and unmeasurable" targets that allow the directors to line their pockets without regard to shareholder benefit.Not surprisingly, the allegations of excessive remuneration were refuted by the board, which adopted the standard response that executive pay is broadly in line with that being offered by competitors, though there was no commentary on whether its competitors' directors were worth their salt or not.Despite the occasionally hostile nature of the shareholders' questions the remuneration package was overwhelmingly supported, garnering 98% of the vote.In contrast, at the ICAP AGM 15% of the votes cast on the board's remuneration package were against it. There were no shareholder questions, however, though some pundits had been expecting a bit of a stink about the timing of a share sale by founder and chief executive Michael Spencer's family trust a month before the company issued a profit warning in February.Meanwhile, at the Marks & Spencer (M&S) AGM attendance was estimated by some sources at around 1,200, with the high attendance possibly due to the free ice cream on offer and the availability of a bar. Celebrity spotters were also rewarded with the appearance of Twiggy, the iconic sixties model who features heavily in the retailer's advertising campaigns.The AGM marked the swan song of chairman Sir Stuart Rose, the erstwhile chief executive of the company who subsequently combined the role with that of chairman to the consternation of some in the City. Rose is going to stand down as chairman when the board appoints a successor and he took this opportunity to sing his own praises, while accusing M&S of "introspection, arrogance and standing still" before he took the helm in 2004.Rose is soon to be yesterday's man at M&S however, and shareholders were more interested in the reasoning behind the £15m transfer fee that secured the defection of new chief executive officer Marc Bolland from supermarket chain Morrisons. Rose explained that the £15m figure represented the potential earnings of the new chief executive and would be paid only if Bolland significantly over-performed. Rose added that it had to offer a generous package to compensate Bolland for relinquishing his existing bonus entitlements at Morrisons.The explanation did not please all shareholders, one of whom asked why shareholders had to take a hit in the form of a dividend cut while the directors still enjoyed generous bonuses. Yet another suggested that paying large "golden hellos" undermined the incentive for people to stay with the company.Rose responded by saying he hoped Bolland would collect every penny of the £15m.When it came to the vote on remuneration Marks & Spencer shareholders proved less acquiescent than their Sainsbury counterparts with 8.6% of the votes cast going against. Investors holding 75.7m shares in the company - some 4.8% of the total shares in issue - abstained from voting.