Grocery giant Morrisons could witness a shareholder revolt at its annual general meeting later this week as advisors condemn its chief executive’s pay package.
Institutional Shareholders Service (ISS), which is thought to hold influence over roughly a quarter of the retailer’s shareholders and advises more than 1700 investors globally, has expressed its concerns over David Potts’ latest pay boost.
It was announced last month that due to the financial gains made by Morrisons over the last year under Potts, his long-term incentive plan (LTIP) could pay out 300 per cent of his current wages, up from 240 per cent.
Investors have been urged by ISS to vote against this pay hike, despite Potts’ role in turning around the grocer’s fortunes.
However, many investors have stated that they were unlikely to follow the advice.
Remuneration reforms and excessive executive pay have become focal points for Prime Minister Theresa May following the BHS collapse and Sports Direct scandals, appearing repeatedly in her domestic policy and personal leadership campaigns.
If a there is a strong opposition to the proposed pay report, the vote would still not be binding, only advisory. But if May can maintain her position and drives promised reforms to pay laws, this could soon change.
In a letter to shareholders seen by Sky News, Morrisons chairman Andy Higginson said: “An important piece of context is that in moving to a 300 per cent award, our normal LTIP grant of 240 per cent is below market median (275 per cent).
“We do not believe that anything about the current performance of management, or the scale of the turnaround, is average and have therefore opted for an award level that reflects the opportunity to create long-term sustainable value for shareholders.”