Shareholders revolt against CEO pay package at Morrisons

The shareholders at Bradford-based supermarket Morrisons have kicked back over plans for a massive payout for chief executive David Potts.

48.11% of shareholders voted against the directors’ remuneration report at the supermarket’s annual general meeting yesterday. Though not enough to b lock the report, with abstentions, this percentage rose to 51%. Conversely, the remuneration policy was supported by 92.35% of shareholders.

Chairman Andy Higginson appeared to blame ISS for the revolt, saying the board “fundamentally disagrees” with the analysis of performance targets for profits and cash flow, which have been softened from previous years to allow a better shot at the bonus.

Institutional Shareholder Services reportedly advised the stakeholders at Morrisons to reject a report which would push Potts’ bonus up from 240% of his basic salary to 300%. Under these plans, he could earn £5.3m a year with wages and bonuses taken into account.

He earns around £850,000 a year, and earned £2.8m last year, of which £1.7m was an annual bonus.

Andy Higginson, chairman of Morrisons, said: “We consulted widely with shareholders on the new remuneration policy, which received strong support, with more than 92% in favour, so we were surprised not to get a higher vote in favour of the directors’ remuneration report,” he said in a statement.

“We fundamentally disagree with the ISS analysis of the performance targets. Not only does the board believe the targets to be significant and stretching, but the judgment on what the right measures are goes to the heart of rebuilding the business for the long term – striking the right balance between investment in the business and continued outperformance.”

At the AGM, 12% of shareholders also voted to get rid of chief executive of Greene King, Rooney Anand from the board of Morrisons.

Morrisons has seen the fastest growth of the Big Four supermarkets this year, with its sixth consecutive period of sales growth under its belt and profits up 50% for the year to 29 January, reaching £325m.

This comes at a time of backlash against long-term incentive plans, with MPs calling on the government to ban complex, share-based pay schemes to bosses. Major payouts at Asos, Drax, WPP and AstraZeneca have faced criticism as shareholders become more aggressive in their opposition to inflated pay packets.