Royal London will vote against Big Yellow’s remuneration report and policy this week, over concerns about rising executive pay.
In a statement this morning, Royal London said it had “long-standing concerns about pay” at Big Yellow, adding: “We are concerned by large salary increases of up to 40% for the executive directors over the next three years. This will have the effect of ratcheting up performance-based pay that’s set as a multiple of salary.”
Big Yellow has proposed to increase its chief executive’s pay, which usually rises in line with inflation, by close to 16% this year from £302,000 to £350,000. It will rise to £440,000 by 2020, which the company said reflects Big Yellow’s growing size and complexity.
However, it said it will cut pension provisions from 15% to 10% of the executives’ salary.
Although Royal London said the new policy, on which shareholders will vote o at the AGM on 19 July, will include a holding period for long-term awards, it said it was worried that variable pay would be more heavily geared towards short-term performance under new plans.
Among Big Yellow’s other proposals are the consolidation of its long-term bonus performance plan into the annual bonus. The annual bonus, which was set at a maximum of 25% of salary under the 2015 plan, will be capped at 150% under the new policy. Up to 25% of executive bonuses will be paid in cash, while the remaining 125% will be deferred in shares.
It is also introducing a two-year post-vesting holding period for long-term incentive awards – not to be confused with its long-term bonus performance plan – which it said would “enhance” shareholder protection.
Big Yellow said its new policy is an effort to simplify its executive pay plan – the company runs three separate incentive schemes – and bring it more in line with the rest of the industry.
Chief executive James Gibson had the biggest annual increase in pay in property this year thanks to his three-year long-term incentive plan vesting, according to EG’s analysis of executive pay. His pay more than doubled from £867,000 to £2.6m.
Among the FTSE All-share property companies, he was the sixth highest paid chief executive in 2017/18.
Gibson was, however, paid the lowest base salary among the companies and the rise to £440,000 would put his base salary in line with companies such as Hansteen and NewRiver REIT.
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