The UK’s largest direct to consumer (D2C) platform announced it would be scrapping its current remuneration method and adopting a new five-year plan to “simplify” its incentives and ensure that executive pay is more closely aligned with performance.
In its 2017 financial report, the firm told shareholders it recognised that its previous Long Term Incentive Plan (LTIP) “was not as effective” in directors building a “long term alignment with shareholders”.
It added that the original scheme “did not act as an incentive, had no retentive draw and did not influence behaviour”.
The LTIP replacement or the Sustained Performance Plan (SPP) will slash the maximum annual bonus payable from five times base salary to three and a half times base salary.
Also, the level of deferral will be increased from 30% to 40% of any bonus earned.
While pushing for pay reform, the firm also announced that its new CEO Chris Hill (pictured) was the recipient of a hefty pay package totalling £2.2m for 2017, despite only replacing Ian Gorham in February 2017.
His total remuneration over the year was a 300% mark-up from the £558,000 he was paid in 2016.
Hill saw his salary increase from £425,000 to £600,000 after stepping into the CEO role. In addition, he was awarded a cash bonus of £825,000, more than 200% higher than his bonus in 2016.
Hargreaves stated that the sum of Hill’s bonus reflects the periods of the year he spent working as CFO, Deputy CEO and CEO and stressed that his base salary would not increase.
Gorham finishes his tenure at the discount broker with a similarly generous pay package of £2.1m, which includes a cash bonus of £1.1m.
In 2014, the former chief executive took home a whopping £10.6m.
Shareholders will be able to vote to approve the revised Directors’ Remuneration Policy during the company’s AGM on 11 October.
An additional vote will be required to approve the new SPP.
