Smurfit Kappa Group's bonus scheme for its top executives has received qualified support from an influential advisory firm to major investors, ahead of the paper packaging group's agm on Friday.

Institutional Shareholder Services (ISS), a proxy advisory firm, said it was concerned about the lack of retrospective disclosure in the annual report on the company's bonus awards. It also noted that severance payments for long-standing executives that leave the group, including a bonus equivalent to the highest such award over the previous three years, are more generous than what investors expect.

However, ISS said “there does not appear to be a material disconnect between pay and performance” at Smurfit Kappa and the group had said any new executive contracts were in line with industry norms.

Tony Smurfit, who succeeded Gary McGann as chief executive last September, was awarded a €3.3 million pay package last year, including basic salary of €963,000, a cash bonus of €303,000 and pension and other benefits worth €265,000.

The annual report, published in March, showed Mr Smurfit also received long-term share awards worth nearly €1.8 million.

Compensation

Mr McGann received €3.8 million in compensation for his final eight months with the group as chief executive, including €842,000 of basic pay.

ISS said it welcomed the fact that Mr Smurfit’s basic salary was set below Mr McGann’s, adding that the company “is encouraged to exercise restraint with respect to salary increases going forward”.

While the annual report gave little commentary in relation to Mr McGann’s termination agreement, Smurfit Kappa has confirmed he didn’t receive severance pay, the proxy firm said.

A Smurfit Kappa spokesman said: “Smurfit Kappa’s remuneration policy and disclosure is in line with best practice, as evidenced by support from both ISS and Glass Lewis, the other leading proxy advisor.”