News Column

ITV chief Adam Crozier's £8.4m pay package criticised by small investors

May 15, 2014

Mark Sweney, theguardian.com



Small investors have hit out at the ITV board, arguing that chief executive Adam Crozier's£8.4m pay package and a new bonus scheme are excessive.

ITV chairman Archie Norman defended the payout at a shareholder meeting on Wednesday.

He said the new scheme – which will see Crozier's maximum bonus increase from 180% to 200% of his £900,000 salary and his long-term incentive plan from 225% to 350% of salary – telling investors that he doesn't get "handouts just for turning up at work".

More than 90% of ITV's shareholders are understood to have voted to approve Crozier's pay and back the new scheme, but several small investors hit out at the plans.

Norman said Crozier's unusually large remuneration was because of a number of share schemes vesting, including a multimillion-pound payout agreed as a joining package to entice the executive from Royal Mail.

"It may feel a bit like all [Crozier's] Christmases have come at once, I rather hope he thinks that too, but the point is coming together of all those schemes combined with fact business has transformed over that period of time," said Norman. "I don't want you to get the impression that these were handouts for turning up at work."

One investor railed against the £3.95m "golden hello" agreed with Crozier, arguing that such an enticement should not be needed to retain top management.

"The management team here started four-and-half years ago when the company was in some difficulty, and over that time we have added about £5.1bn to the value of the business as at the start of the year," said Norman. "As a consequence shareholders have benefited and it is not unreasonable to think that management would have received an incentive as a result."

The same investor criticised the new remuneration plans ITV intends to introduce, arguing that the performance targets did not seem tough enough.

"The remuneration committee looks extremely closely and takes a great deal of advice on remuneration packages," said Norman. "All of this has been consulted on with our leading shareholders and the result is we think we are now well set up in terms of a remuneration framework for the business for the next four to five years. We have the overwhelming support of all our shareholders."

The level of Crozier's bonus payout – up to a maximum potential of 200% of his salary – is based on 60% financial performance and 40% personal management targets.

Share awards under the new long-term incentive plan will be assessed on criteria including adjusted earnings per share, the growth of international production revenue, online and pay revenues, and the share of viewing of the ITV family of channels.

Non-executive director Andy Haste, the head of ITV's remuneration committee, said that the measures used for the LTIP scheme "hugely critical to future success of ITV".

"They are based fundamentally around the shift and shape and strategic direction of business," he added. "They are very much aligned to strategy of the company and to its future creative and financial health."

The official outcome of voting on ITV's resolutions will be made public either at the end of Wednesday or early on Thursday.

Royal London Asset Management, which owns a 1.2% stake in ITV, has said it voted against the broadcasters' new remuneration policy – although it supported Crozier's £8.4m pay last year.

The Association of British Insurers is understood to have issued an "amber top" warning, but no major shareholder voiced their concerns at the meeting in Westminster, London.

"This is very people-intensive business," said Crozier. "We have seen from history at ITV that having outstanding management team properly paid and committed to the company ... it is vital for the success of our business. It is right management should be properly incentivised. I'm perfectly happy, it is quite right the management should have done well out of it."

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Source: Guardian Web


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