Pension funds and corporate governance experts urged WHSmith to rethink its remuneration arrangements after a shareholder revolt at the retail giant's annual general meeting.
One in three of the firm’s shareholders voted against or abstained from approving the company’s remuneration report at the AGM.
Investors were protesting against a £1.2m “golden hello” for new chief executive Kate Swann – who could pick up much of her £3m remuneration package irrespective of corporate performance.
The National Association of Pension Funds joined investor lobby group PIRC in recommending shareholders vote down the report.
An NAPF spokesman said: “This was a sizeable shareholder protest with 33% sharing our concerns and failing to support the remuneration report.”
WHSmith chairman Richard Handover said the high remuneration was justified to tempt Swann from her previous post as Argos managing director.
The high street retailer, which last month issued a severe profits warning, had angered shareholders by making former chief executive Handover the new chairman – a move which contravenes best practice guidelines in the Higgs report.
At the meeting, Handover said the move was due to the unusual circumstances of his predecessor’s ill health and the firm said it hoped to appoint a new chairman by 2005.
PIRC corporate governance adviser David Somerlinck said the meeting left unanswered questions over why Handover had not taken a pay cut when he was made chairman. He said: “The former chairman’s salary was £176,000 but Hand-over has remained on his chief executive wage of £465,000.”
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