News Column

Kentz shareholders first to vote down pay policy and remuneration report

May 17, 2014

Jill Treanor, theguardian.com



The biggest shareholder revolt of the year has taken place at engineering company Kentz, which is now being forced to tear up its pay plans for its bosses after they were rejected by investors.

It is the first time that investors have voted down a company's pay policy - which covers proposals for paying staff over the coming three years and was introduced in October by the business secretary, Vince Cable.

But shareholders in Kentz rejected not only the pay policy but also the remuneration report, which covers bonuses and salaries paid out during the past year .

It is the first time that any company on the London stock market has had both voted down, and it also the first time that Kentz had put its pay policies to a vote because it had been exploiting a loophole to avoid doing so because it is registered in Jersey.

The vote on the pay policy is binding while the vote on the remuneration report is advisory but sends a clear signal to the company about investors' views on pay deals.

The company issued a statement to say its remuneration committee "has already begun consultations with our shareholders to determine how these concerns can be best overcome".

Kentz added: "The committee will discuss with them how our remuneration policy can be aligned with the needs of an LSE listing, while retaining our competitiveness in the broader industry in which we operate.

"We have a clear commitment to governance and shareholder engagement and we look forward to continuing dialogue with our shareholders on the remuneration of our directors. Once this consultation has concluded, we will put the revised remuneration policy forward for another vote in due course."

The votes on pay policies are being closely watched by companies because they are binding. HSBC this week clarified its proposals to potentially hand a bonus to its chairman, Douglas Flint, that was contained in its pay policy for the coming years.

Hiscox, the Lloyds of London insurance broker, had this week suffered the biggest rebellion against a the new remuneration policy vote when 42% of investors voted against its plans.

Paul Hewitt, business development manager at Manifest, said: "Until today we were talking about Hiscox being the biggest so far so Kentz is the first to be defeated this year."


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Source: Guardian Web


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