Morrisons investors rebel over executive pay

Shareholders at supermarket giant Morrisons rebelled against boardroom pay today with almost half of investors voting against its remuneration report.
David Potts, chief executive of MorrisonsDavid Potts, chief executive of Morrisons
David Potts, chief executive of Morrisons

At the Bradford-based firm’s annual general meeting today, 48.1 per cent of shareholders voted against the report after a leading adviser recommended opposing it.

The report showed that turnaround chief executive David Potts was paid a total of nearly £2.8m last year, up from just over £2.2m the year before.

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ISS, whose judgements can influence around a quarter of a company’s shareholder base had expressed concerns that Mr Potts’s long-term share award was increased from 240 per cent of his salary to 300 per cent, despite the fact performance targets were reduced.

However, 92 per cent of investors were in favour of the supermarket’s new three-year remuneration policy.

In a statement issued after the firm’s annual general meeting today, Morrisons’ chairman Andy Higginson said: “We consulted widely with shareholders on the new remuneration policy which received strong support with more than 92 per cent in favour so we were surprised not to get a higher vote in favour of the Directors’ Remuneration Report.

“However, we fundamentally disagree with the ISS analysis of the performance targets.

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“Not only does the board believe the targets to be significant and stretching, but the judgement on what the right measures are goes to the heart of rebuilding the business for the long term - striking the right balance between investment in the business and continued outperformance.”

According to the latest Kantar Worldpanel figures, Morrisons was the best performer out of the big four supermarkets with a 1.9 per cent increase in sales over the 12 weeks to May 21.

In March, in a set of results which analysts said would have made its late boss, Sir Ken Morrison, “very happy”, the company reported a 50 per cent rise in pre-tax profits to £325 m in the year to January 29 - its first rise in profits in five years.

Like-for-like sales rose 1.7 per cent over the year and by 2.5 per cent in the fourth quarter.

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Addressing shareholders at today’s meeting, Mr Potts said: “We’re quietly building a broader and stronger business, one that provides a capital-light route to long term growth well into the future.”

He added: “I believe our planned improvements for the future will further differentiate this company from its competitors for each of its stakeholders.”

Mr Potts has delivered a steady improvement in trading, helped by more competitive prices, improved product ranges and availability and better customer service since he joined Morrisons in 2015.

Today, he said Morrisons had made £1bn worth of cost savings over the last three years.

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UK supermarket chains are having to deal with higher import costs as the pound has tumbled since last June’s Brexit vote.

Mr Higginson told shareholders that despite the economic and political uncertainty in the UK, the consumer remains resilient so far. “None of us knows how the next few months and years will pan out but the team won’t allow Morrisons to be the victim of any uncertainty,” he said.

“We’ll do what’s best for customers.”

Meanwhile, Mr Higginson paid tribute to Sir Ken, quoting Terry’s Song by Bruce Springsteen. “One of my favourite songwriters, on hearing of the death of a best friend wrote these lines: ‘They say you can’t take it with you, but I think that they’re wrong; all I know is I woke up this morning, and something big was gone’. And something big is missing today. Sir Ken Morrison passed away at the beginning of February this year and we miss him,” he said.

Sir Ken’s widow, Lady Lynne Morrison, attended the meeting along with other members of the Morrison family.