Close Brothers is facing a shareholder revolt over plans to almost double its chief executive’s basic salary.
Next Thursday shareholders will be able to vote on proposals that would see Adrian Sainsbury’s basic pay rise from £550,000 to £900,000 and his guaranteed pay would rise from £605,000 to £1.023m.
Sky News reports “a number of Close Brothers’ leading shareholders” plan to oppose the remuneration policy at the AGM on 18 November.
Proxy advisory group Institutional Shareholder Services (ISS) is recommending shareholders reject the policy, which has been adopted to circumvent the European Union’s bonus cap rules, Capital Requirements Directive (CRD V), that limit the proportion of variable to fixed pay for bank executives.
ISS acknowledged Sainbury’s overall pay opportunity is being reduced under the proposed new policy.
“Concerns are raised in the use of the cash-settled salary as the primary vehicle to increase the fixed pay element, when adopting the variable to fixed pay cap imposed by CRD V, rather than introducing a clearly-separated additional pay mechanism to better align with shareholder interests.
“This will lead to significant increases in guaranteed cash-settled pay to the executive directors, which was not the original intention of the variable pay caps originally introduced by CRD IV.”
A spokesman for Close Brothers told Sky News: “Close Brothers has conducted a positive and extensive consultation with shareholders on the proposed changes to its remuneration policy, which are entirely in response to regulatory requirements.”
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