ISS leads shareholder revolt against £375,000 bonus for SIG’s new CEO

Shareholder advisory group ISS is leading a protest against a £375,000 bonus for SIG’s new chief executive Steve Francis, which the company wants to pay out for his work since February 25.

Francis is a turnaround specialist and was brought in to work his magic on the £2bn-turnover building materials group.

The company has credited Francis with having a big impact already on the Sheffield-headquartered business. He also joined on a lower salary than his predecessor and has taken a 20% cut in salary for the last three months.

The payment is 65% of Francis’ base salary, and he has committed to reinvest £150,000 in SIG shares.

A SIG spokeperson said the company was “disappointed with the recommendation to vote against this resolution, as we are firmly of the view that this payment is fully justified”.

They added: “He has managed through the crisis, developed a new strategy, strengthened the senior management team, renegotiated the company’s debt facilities, introduced CD&R as a cornerstone investor and led a £165m capital raise – therefore putting the company on a sound financial footing, and well-positioned to realise considerable shareholder value.”

Francis’s bonus is also dependent on the capital raise being approved by shareholders.

But ISS remains unimpressed, telling SIG shareholders that “one-off payments are generally considered to be poor practice in the UK market”.

It is encouraging a vote against Francis’s bonus at the July 9 meeting, although it is recommending support for the other resolutions.

It said: “While a portion of the payment will be invested in shares under the capital raise, the remaining amount is to be remitted in cash – this would appear to clash with the cash control measures currently in place due to the Company’s financial condition and the prolonged impact of COVID-19.

“Such payments are generally considered to be in poor practice, and the company’s present circumstances only exacerbate this concern. The fact that the bulk of the award is to be delivered in cash also raises a question, as this does not achieve any longer-term alignment with shareholders.”

SIG shareholders have felt a lot of pain in the last year, with its share price down 80% since April 2019. The company, which employs 6,500 people worldwide, has a market value of just £180m.

Francis has built a reputation as a turnaround specialist with successes at Vion Food Group, Danwood Group and Tulip. He joined Patisserie Valerie to deal with its crisis after an accounting black hole was discovered and his work was crucial in the brand surviving.

He joined SIG at the end of February in an interim role before taking the job permanently in April.

SIG distributes specialist building products from sites in the UK and Europe.

Its underlying operations made a pre-tax loss of £113m in 2019, dragged down by a 9% drop in sales and falling market share in the UK and Germany.

SIG’s board blamed “poor execution of transformation initiatives” which it believes “disconnected the business from its customers, suppliers and its front-line colleagues”.