In light of 'excessive payments,' advisory groups recommend that shareholders vote against the reward package. Mike Ashley's (Mike Ashley) A confrontation with shareholders is expected on Wednesday as Frasers Group seeks permission for a £100 million incentive plan for its new chief executive, Michael Murray, and a cash payment for its finance director, despite having received millions of pounds in government assistance.
Influential advisory groups Pirc and Glass Lewis have advised shareholders to vote against the company's remuneration plan at its annual shareholder meeting, citing "excessive payouts." Meanwhile, proxy voting service Minerva Analytics has stated that shareholders may consider the ultimate payout to be "unreasonably high," despite the stretching target that has been established.
Murray, who is engaged to Ashley's daughter, is scheduled to earn slightly over £100 million if Frasers' share price rises to £15 for 30 consecutive trading days in the four years starting on 7 October 2021, an increase from the current price of approximately £7. Murray is the fiancé of Ashley's daughter. The incentive would be in addition to his basic pay of £1 million each year.
Frasers revealed in August that Murray, who started working for Ashley's retail company in 2016, will be taking over as chief executive from his future father-in-law the following year, according to the Project Fund Times. According to Frasers' annual report, Chris Wootton, the company's finance director, could earn up to £9 million under the new share incentive plan, which would begin paying out if the company's stock price reached £12 for a 30-day period after it was implemented.
As a result of his "extraordinary achievements in guiding the business through a time of unparalleled difficulty" that occurred during the epidemic, Wootton received a £100,000 cash bonus on top of his £150,000 pay in the previous year. His pay was increased to £250,000 on May 1st this year, and he now has the opportunity to earn a yearly bonus of up to £500,000 more and a total of up to £9 million under the new long-term share incentive plan.
"Strengthening and attainable," according to Frasers, are the goals of the new share incentive programme. The payments, on the other hand, came after Frasers claimed £80 million in furlough aid and £97.5 million in business rates relief worldwide year year - the firm did not specify how much of this was claimed in the UK, although it is believed to have accounted for the vast bulk of it.
As a result of the Covid-19 epidemic, Glass Lewis recommended investors to vote against Frasers' compensation plans because the firm was "concerned about the committee's intention to award a discretionary bonus to the CFO." It also voiced "severe concerns" about the new share incentive system, stating that it may reward "short spikes in performance, rather than sustainable long-term development," as opposed to "sustainable long-term growth."
Additionally, the Pirc urged investors to reject the proposed share bonus system, stating that incentives tied exclusively to a company's share price ran the danger of rewarding failure. In its analysis, the firm warned that "uplift [in the share price] due to favourable macroeconomic factors may result in CEOs being unduly rewarded for little work."
Pirc stated investors should reject the group's compensation report, as well as the reappointment of chairman David Daly and senior independent director Richard Bottomley, as proposed by the company. Bottomley is being criticised for his role as chairman of the audit committee, in part because Frasers does not have an independently operated whistleblower hotline. As a result, it seems that such concerns that should be made by a whistleblower are handled with internally, which increases the danger of such problems not being followed up or rising to a level at which the greater the degree of wrongdoing, the more probable it is that the issue would be hidden."
