Morrisons has endured a backlash from its shareholders as nearly half of them voted against chief executive David Potts’ increased remuneration package.
It was reported on Monday that Institutional Shareholder Services (ISS), which is thought to hold influence over a quarter of the retailer’s shareholders, advised against voting for the increased pay package after Potts’ proposed long-term incentive plan award rose to 300 per cent of his salary.
Despite speculation that shareholders would support Potts due to his successful turnaround of the grocer, 48.11 per cent voted against the report.
“We consulted widely with shareholders on the new remuneration policy which received strong support with more than 92 per cent in favour so we were surprised not to get a higher vote in favour of the Directors’ Remuneration Report,” chairman Andy Higginson said.
The ISS argued that the chief executive’s performance targets were too low, while increases in LTIP were too high. If his proposed award targets were met, Potts’ pay would go from £2.79 million in 2016/2017 to £5.3 million in 2020.
READ MORE: Shareholder revolt looming for Morrisons
Higginson argued that despite the shareholder revolt which isn’t binding, the board supported the targets and passed the policy by 92.35 per cent.
“Not only does the board believe the targets to be significant and stretching, but the judgement on what the right measures are goes to the heart of rebuilding the business for the long term – striking the right balance between investment in the business and continued outperformance,” he added.
Potts is attributed to transforming the fortunes of Morrisons after its decline under former chief executive Dalton Philips.
Earlier this year the retailer reported a 49.8 per cent jump in pre-tax profits.