Investors reject SIG's pay report
The Sheffield-based company will increase Chris Davies' pay by 14.6 per cent this year, even though profits and sales fell steeply in 2009.
Shareholders at the group's annual meeting yesterday voted almost 67 per cent against the report, with only 33 per cent in favour.
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Hide AdHowever, the vote is only advisory and SIG confirmed it will increase Mr Davies' pay to 532,875 from 465,000 last year.
The group was forced to cut 1,774 jobs and close 72 branches during 2009 in order to save 65m. Restructuring charges and other one-off items meant it posted bottom-line losses of 55.3m. SIG was also forced to tap shareholders for 325m with a deeply discounted cash call.
Influential investor body the Association of British Insurers (ABI) issued a "red top" alert over the remuneration report,
indicating "disapproval". Only five UK plcs' pay reports were voted down last year.
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Hide AdSIG chairman Les Tench said he was "extremely concerned" by the vote, but added the increase was deferred from a year earlier.
"Chris has performed extremely strongly in difficult circumstances since his appointment and has provided exemplary leadership and direction to the group as we undertake a significant restructuring and cost-cutting exercise," he said.
"I and the remuneration committee strongly believe that the new salary is not excessive. However, I recognise the strength of shareholder opinion on this issue and intend to consult further with our shareholders to understand their concerns fully."
A spokeswoman added: "The board stands by the salary increase."
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Hide AdSIG also yesterday revealed its sales slide is beginning to ease as the UK construction sector continues to improve. The company said sales from January to May 12 were six per cent down on a year earlier, at constant currency levels.
SIG now expects monthly sales to level out in the summer, but is cautious about the market's recovery. It expects its second half to be stronger than its first half.
SIG was hammered by heavy snowfall in the early months of the year, which compounded the impact of stalled construction across the UK and Europe.
That meant it lost around 30m of sales as cold weather brought construction to a standstill. But the group is beginning to recoup some of these lost sales.
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Hide AdIn April, sales in local currency were just two per cent lower than the same month a year earlier.
SIG said it is well placed to benefit from increasing demand for insulation in the medium term, driven by higher regulatory standards.
Body that's seeing red
Influential investor body the Association of British Insurers (ABI) recently warned institutional shareholders are increasingly voting against UK company boards.
The ABI said serious breaches in governance led to a much higher vote against companies on controversial issues in 2009, compared with the previous year.
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Hide AdThe ABI said an average of 30 per cent of shares were not voted in favour of management in 2009 when it issued a "red top" concern about an issue, up from 13 per cent in 2008. It uses a colour-coded system to advise investors, and a "red top" indicates a matter of serious
concern.
"It is clear that shareholders are ready to signal their impatience with companies whose remuneration approach does not take account of the impact of the economic downturn," said Peter Montagnon, ABI;s director of investment affairs.
"This mood appears likely to continue in 2010," he added.