Shareholders' Upheaval Over Executive Compensation: 40% Vote Against Enhanced Director Remuneration Packages Proposed by Centrica
Centrica's shareholders have taken the company to task over executive pay, particularly concerning chief executive Chris O'Shea. Over 40% of votes in the annual general meeting were cast against rewards to directors, with O'Shea's remuneration causing the most contention.
O'Shea received a £4.3 million package last year, which included a basic salary topped up by bonuses and perks. While this amount was less than half of his previous year's compensation of £8.2 million, he recently got a £245,000 pay raise, bumping his basic salary for 2023 up to £1.1 million. Depending on performance-based bonuses and awards, O'Shea stands to earn as much as £5.9 million this year.
All of this comes at a sensitive time, as on the same day O'Shea received his raise, the typical household energy bill increased 6.4%, or £111, to £1,849.
Greenpeace UK's head of climate, Mel Evans, commented on the profiteering trends, saying, "You know the profiteering has gone too far when even the shareholders start rejecting the bumper pay rises."
Centrica acknowledged the shareholder vote results and expressed a commitment to ongoing dialogue with shareholders. The company plans to provide an update within six months.
Shareholder proxy adviser Institutional Shareholder Services (ISS) allegedly recommended against supporting O'Shea's pay packet, stating that the salary positioning and manner of implementation did not have a cogent rationale.
Interestingly, this isn't a one-off event. Companies such as Unilever and Melrose have faced similar shareholder revolts over pay in April.
On a different note, the boss of Tesco, Ken Murphy, experienced a £1 million pay cut last year but still earned £9.2 million. Despite the reduction, Murphy still makes 373 times what a typical Tesco worker does. Notably, Murphy himself acknowledged that he is highly paid.
Corporate America: It's a rich man's game, y'all, huh?ulating potential rationales, aligning the pay package with peers' remuneration within the FTSE 100, emphasizing O'Shea's performance and industry experience, and disproportionate pay increases between executives and the wider workforce.
Sources:1. FTSE 100 CEO Chris O'Shea told it wasn’t ‘possible to justify’ his €8.2million pay packet – The Guardian2. Bonus outcry as Centrica chief swings from pay cut to salary rise – The Times3. Nearly half of Centrica investors vote against executive pay – BBC News
- The high salary of Centrica's executive, Chris O'Shea, despite a pay cut last year and a subsequent pay raise, has been met with shareholder disapproval, as over 40% of votes in the annual general meeting were cast against the rewards to directors.
- In the eyes of Greenpeace UK's head of climate, Mel Evans, the profit-oriented trends, such as O'Shea's bumper pay raises, have gone too far even for shareholders.
- Centrica acknowledged the shareholder vote results and emphasized their commitment to ongoing dialogue with shareholders, promising an update within six months.
- Institutional Shareholder Services (ISS) allegedly recommended against supporting O'Shea's pay packet, questioning the salary positioning and manner of implementation.
- The discrepancy between executive pay and the average worker's salary, as shown in cases like O'Shea's and Tesco's boss Ken Murphy, highlights the need for potential rationales, such as aligning pay packages with peers' remuneration within the FTSE 100, emphasizing performance and industry experience, and addressing disproportionate pay increases between executives and the wider workforce.
