Smith & Nephew’s CEO’s pay rise to go through despite shareholder concerns

Smith & Nephew has shrugged off shareholder complaints about a potential 30% pay rise for its chief executive, after it ended a consultation process without making any concessions.

More than 40% of voting investors were against plans to increase Deepak Nath’s earnings to up to £9.5m when it was put to a vote at the company’s AGM in May.

Smith & Nephew promised to consult with shareholders, in line with the UK Corporate Governance Code, and did so over a six-week period in June and July.

It said that shareholders had responded “to confirm that they understood the rationale for the long term incentives”.

It added: “Following closure of the consultation and given the lack of additional feedback from investors who did not support the Resolutions, the board has resolved to adopt and implement the policy and the RSP [Restricted Share Plan] on the terms approved by shareholders at the AGM.”

The controversy around Nath’s remuneration is in part caused by a split between American and British attitudes to pay.

Nath is based in Texas, and Smith & Nephew has two-thirds of its assets in the United States. Its chief executive is seen as an attractive target for headhunters unless he is paid well by American standards.

However Smith & Nephew is headquartered in the UK, and convention has been that a chief executive’s pay is in line with the market where the company is listed.

Analysis released today by the High Pay Centre showed median pay for a FTSE 100 chief executive had reached £4.19m last year. If Nath was to achieve his targets and receive his maximum earnings, he would be in the top band of earners even within the gilded group of FTSE-100 chief executives.