Morrisons has been hit by a major protest vote against its pay policy for top executives.
More than a third of investors voted against the supermarket’s pay policy at the company’s annual shareholder meeting on Thursday, with the generous pension deals enjoyed by the chief executive, David Potts, and the chief operating officer, Trevor Strain, a major source of anger.
The UK corporate governance code says executive pension contributions should be in line with those of the workforce, but while Potts and Strain bank payments worth 24% of their basic salaries, the majority of shopfloor staff get 5%.
Ahead of the meeting, the Investment Association, which represents UK asset managers, had raised a red flag over the pensions issue while ISS, an investor advisory group, has also opposed the policy.
Morrisons insisted that despite the outcome – with a 34.8% vote against the resolution to approve the pay policy – it had consulted extensively with investors: “Although the policy vote passed, and we received considerable positive feedback during consultation, the board acknowledges a number of shareholders decided to vote against the policy.”
Kevin Havelock, who chairs the remuneration committee, has been tasked with a fresh round of shareholder talks and would “report in due course on the outcome of those discussions”, the company added.
The annual meeting, held at Morrisons’ headquarters in Bradford, was not attended by investors, who had to vote by proxy because of the coronavirus lockdown.
Potts received a £4.2m pay package last year, including a £2.3m long-term share bonus. The payout was slightly down on the £4.5m of the previous year, but raised eyebrows as it was not far behind the £6.4m received by the Tesco boss Dave Lewis, who runs a far bigger business.
Morrisons also issued a message of support for Belinda Richards, after a fifth of shareholders voted against her re-election as a nonexecutive director.
The company said the result was driven by the votes from a small number of institutions who applied a more stringent voting policy on directors’ external commitments. Richards, a former corporate finance partner at Deloitte, has a portfolio of nonexec roles including at the software company Avast.
“The board strongly supports Belinda’s re-appointment to the board, and throughout her tenure she has demonstrated her commitment to the company and ability to dedicate sufficient time to her duties,” the company said in a statement.
The conduct of the big supermarkets has come under scrutiny during the pandemic. The business rates holiday has saved them hundreds of millions of pounds at a time when they have been raking in extra sales.
Morrisons is not the only supermarket to face criticism: last month 30% of Ocado shareholders voted against a pay rise and £88m bonus for the online grocer’s directors.