It has been a few years now since the so-called Shareholder Spring, when investors either rejected or voted in large numbers against the pay packets for top brass at numerous public companies.
Despite the brouhaha those votes created, in truth there was little long-term impact on executive pay.
Companies made noises about listening to shareholder concerns but, from the outside, the issue appeared to be subsumed as the news cycle kept moving. The general issue of chief executive pay does, however, keep coming up.
This time, ISS – one of the so-called proxy advisers that essentially counsel shareholders what way to vote on resolutions at a company’s annual general meeting – is urging investors to reject the remuneration report at Irish Continental Group, the owner of Irish Ferries. At issue is the bonus structure for top executive Eamonn Rothwell. While ISS accepts Rothwell’s pay is largely aligned with his performance, “there are concerns with the nature of the CEO’s bonus, and the non-disclosure of the EPS targets” that drive the reward, it said in a report.
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From engagement with the company, ISS understands Rothwell does not have a “guaranteed right to receive an annual bonus” yet the board’s remuneration committee is limited in what it can do about it, while shareholders “do not know the targets on which [the] bonus is based”.
“A legacy contractual arrangement continues to govern Mr Rothwell’s performance related pay,” an ICG spokeswoman said. “The consistent application of the EPS performance related bonus formula and the full investment of this bonus in ICG shares was considered by the remuneration committee to be appropriate”.
While the remuneration report is the only resolution ISS specifically urges shareholders to reject, it does also raise concerns about the tenure of chairman John McGuckian. Mr McGuckian (84) has been chairman since 2004 and has sat on the board for 36 years – far in excess of the nine-year limit seen as corporate governance best practice.
Still it does recommend re-electing Mr McGuckian, even if it is “is not without concern, due to the chair’s length of tenure”.
“However, in mitigation, the company has explained its approach and has engaged with shareholders on the subject. There has also been regular board refreshment,” ISS adds.
ICG’s agm is set for May 9th.
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