Group’s annual general meeting sees almost a third of shareholders vote against criticised pay scheme
Cookson has become the latest UK business to suffer a shareholder revolt over pay as nearly a third of investors rebelled against the industrial material group’s boardroom pay policy – which has awarded £20m in shares to the group’s three most senior executives.
The group’s annual general meeting on Thursday saw 31.8% of investors vote against a pay scheme that has been strongly criticised by shareholder advisory groups. It was backed by 68% of investors.
Cookson’s chairman, Jeff Harris, said the award was justified. “There is no suggestion whatsoever that this is in some way an example of reward for failure,” he said.
Under the terms of the scheme the chief executive, Nick Salmon, was given shares worth around £7m, with the finance director, Mike Butterworth, receiving shares worth £3.6m and the head of the ceramics division, François Wanecq, being awarded stock worth £9.3m.
The Association of British Insurers had issued a red-top alert – its highest level of objection – over the report while Pirc, another advisory service, called for a vote against the reappointment of the board. The proxy votes showed that every director was voted back on with a majority of 94% or higher. However, including abstentions, around 13% of shareholders failed to back the re-election of three board members who sat on the remuneration committee: Jan Oosterveld; Peter Hill; and Jeff Hewitt. The committee chairman, John Sussens, was not backed by 14% of shareholders once abstentions were included.
In statement issued after the AGM, Harris said: “The board continues to listen very carefully to views expressed by shareholders and will be taking these into account along with the result of today’s vote on the remuneration report, as remuneration policy is formulated going forward and we develop future policies.”
Cookson joins the ranks of big pay protest votes this year, which include ballot rebellions at Barclays, Xstrata and William Hill, as well as the enforced departures of chief executives at Trinity Mirror, Aviva and AstraZeneca.
Cookson also addressed wider shareholder concerns about its growth by raising the prospect of a demerger. It announced a strategic review that will consider separating its two major divisions: engineered ceramics, which makes products for the glass, steel and solar industries; and performance materials, which supplies to the electronics and automotive markets. Scott Cagehin, an analyst at Numis Securities, said: “We believe that this strategically makes sense, especially given the individual nature of the divisions.”
A 4.3% shareholder in Cookson said the demerger could allow a revamp of the group’s remuneration structure. Gavin Morris, a partner at Governance for Owners, which describes itself as a “responsible activist shareholder”, said: “They are looking at the demerger option. In a demerged entity there is an opportunity to look at the remuneration structure.” GfO backed the remuneration report, saying that Cookson had a “good remuneration process”.