Diploma plc: CEO departure deemed to be in the shareholders’ interest
FTSE 250 listed Diploma plc appointed in April of 2018 Richard Ingram as Interim Chief Executive ahead of the anticipated retirement of long-serving CEO, Bruce Thompson in May. The Remuneration Committee agreed to compensate Ingram for existing incentives from his previous employment which comprised a cash bonus of £1.0m in the form of 40% cash and 60% nil cost options, and two grants of nil cost options replacing incentives relating to the years ending September 2019 and September 2020. The LTIP awards represented an aggregate of 291.7% of Ingram’s base salary.
Four months after Ingram’s appointment it was announced on the 29 August 2018, that he had stepped down from his position as CEO and Chairman John Nicholas stated that ‘The Board believes that a change in CEO is in the best interests of the Company and its shareholders’. Following his departure from the Board, Ingram received a sum of £507,200 in lieu of his unworked contractual notice period, an additional exit payment of £360,000 by way of settlement of potential claims for loss of bonus and incentive opportunities and a contribution of £20k towards legal fees.
The Board has confirmed that the Nomination Committee has commenced a recruitment process to find a replacement CEO, with Korn Ferry’s assistance. John Nicholas has assumed the role of Executive Chairman and will remain in this role until a new CEO is appointed.
On remuneration, shareholders will note that the Company operates an annual bonus which is based entirely on adjusted operating profit. While the profit targets utilised during the year have not been fully disclosed, full pay-out under the plan has been awarded. Bruce Thompson however, was paid a full bonus despite not serving the full year. Shareholders will also note that the performance target used to determine awards under the TSR portion of the Long Term Incentive Plan is measured against the FTSE 250 (excluding investment trusts), which is a relatively broad comparator group.
Governance Issues at AGMs
