Jefferson Smurfit chairman and chief executive Dr Michael Smurfit will face a barrage of criticism over his remuneration package at the group's annual general meeting today.
But while some Irish institutional investors have taken the unprecedented action of voting against the re-election of five directors and the adoption of the annual report, there is no question of these motions being defeated. As chairman, Dr Smurfit will hold sufficient proxies to ensure the motions are comfortably carried.
However, given the outcry over his €6.6 million (£5.2 million) salary and bonus package last year, there is speculation that Dr Smurfit, for the first time, will make a public statement justifying the remuneration paid to him and other Smurfit directors.
There is also speculation that Dr Smurfit may adopt a more conciliatory approach in his chairing of the a.g.m. than he has in the past. While three Irish institutional investors have registered their disapproval of his remuneration package either by voting against or abstaining on some of the motions, none of these institutions is expected to speak at today's meeting. Other institutions have registered their votes in favour of the two motions but have warned that they expect fundamental changes in the way the company rewards Dr Smurfit or they might vote against annual reports at future annual meetings.
Aberdeen Asset Management, which owns 2 per cent of the company, has led the Irish institutional opposition to Dr Smurfit's pay package. Aberdeen will vote against the adoption of the annual report and the re-election of five directors - Mr Dermot Smurfit, Mr Howard Kilroy, Mr Martin Rafferty, Mr Albert Reynolds and Dr Mary Redmond.
Irish Life Investment Managers, which has a 2.6 per cent stake in the company, is voting against the re-election of the five directors. Sources close to Irish Life said its representative at the a.g.m. will not be speaking. "Irish Life Investment Managers' vote is a significant enough move."
He added that Irish Life was specifically voting against the re-election of the five directors because "non-executive directors are the ones who are meant to oversee issues like this". He added that its vote reflected the institution's frustration at the lack of progress on the remuneration issue. AIB Investment Managers, which has a 3.5 per cent stake, will abstain on both the resolutions and has taken the view that withholding its approval sends a strong enough signal to the board about its unhappiness at the situation.
No other Irish institution has made its voting intentions clear but it is understood that Smurfit's largest Irish shareholder - Bank of Ireland Asset Management (with an 8 per cent stake) - will vote in favour of both motions. It is a subsidiary of Bank of Ireland and two of the Smurfit directors up for re-election, Mr Kilroy and Dr Redmond, are also directors of Bank of Ireland.
Standard Life, which has a 1.4 per cent stake, is also expected to support the two resolutions. Standard Life would not comment on its voting intentions but sources close to the company said: "There are risks to the reputations of both the company and the board. It's important that the company is publicly seen as listening to shareholders' views and not being dismissive of them.
"We will look closely how remuneration policies are structured from here and that bonus arrangements are not a soft option for directors."
Another Irish shareholder, Hibernian, declined to comment on its intentions.
But with more than 40 per cent of Smurfit shares held by US institutions, which tend to take little interest in issues like directors' remuneration, there is no doubt that the challenge will be seen off.
