Double whammy of protests and shareholder revolt hit Drax
Over a third of shareholders voted against its remuneration report, which included annual remuneration of £971,000 for chief financial officer Will Gardiner, including a bonus of £479,000.
Drax, which operates a giant power station near Selby in North Yorkshire, also had to contend with simultaneous protests outside its AGM in York, at the offices of two of its largest investors in the City of London and in Liverpool at Peel Port, where woodchips arrive before being burnt at Drax.
A spokeswoman for campaign group Biofuelwatch said there were over 30 people attending the protest in York.
“Campaigners are highlighting Drax’s involvement in dirty energy, its contributions to climate change and deforestation, and its continued reliance on Government subsidies – which should instead be going to support energy conservation and genuinely renewable energy,” she said.
Drax chairman Philip Cox said: “The sustainable biomass we use to provide energy is at the heart of our business.
“Because this must be sustainable we always strive to ensure all our pellets comply with our policy. We are well aware of the obligations we have to society, and specifically the communities in which we are located, as well as the wider environment.“
Following the shareholder revolt, Drax said it will engage further with shareholders on executive pay.
Shareholder adviser Institutional Shareholder Services had recommended voting against the report because it thought Mr Gardiner’s bonus was “excessive” in view of the company’s performance the previous year.
“Discussions have already taken place with a number of institutional shareholders who did not support the remuneration report or remuneration policy resolutions,” Drax said in a statement following the vote at its AGM.
“Further engagement is expected with shareholders as part of an ongoing programme,” it said.
Nearly 23 per cent of shareholders also voted against Drax’s new remuneration policy, which will apply from this year.
Executive remuneration has come under growing scrutiny after a series of corporate scandals, and politicians have urged firms to overhaul pay policies.
In a statement following the AGM, a spokesperson for Drax said: “All payments and awards to directors were in line with the remuneration policy. 99.99 per cent of shareholders voted in favour of receiving and adopting the annual report and audited accounts.
“A conditional share award made under an old remuneration policy, which some shareholders had raised concerns about, has been replaced with a new policy.
“This was supported by a large majority of our shareholders. During the preparation of the new policy we engaged extensively with our shareholders to ensure it was aligned with their views.”
Mr Cox told shareholders at the AGM that 2016 was a pivotal year for Drax, marking the completion of the biomass transformation project which started in 2012.
He said underlying earnings for 2016 at £140m was in line with guidance, although they were £29m lower than 2015.
“This reflects the continuation of challenging commodity markets and the removal of Climate Change Levy (CCL) exemptions,” Mr Cox told investors.