Educational services company Pearson, lost the vote on its remuneration report at its AGM last week (5th May). There were also significant votes opposing the company’s remuneration policy and the re-election of the remuneration committee chair.
If abstention votes are included in the total of votes there was a 61% vote against the remuneration report, 32% vote in favour and 7% abstention rate. The result came after Pearson had announced its largest ever loss in 2016 – of £2.32m – and yet the total remuneration of its chief executive, John Fallon had risen to £1.5m compared with £1.3m in 2015.
The proxy voting results showed that 29% voted against the company’s remuneration policy and 7% abstained while 27% voted against the re-election of Elizabeth Corley, the remuneration committee chair, as a director on the board.
Pearson said that in 2016 it had engaged with its major shareholders to understand their views on remuneration matters. The company said: “We were disappointed that the advisory vote for this year’s remuneration report was not passed and that, although passed, there was a significant minority vote against both our remuneration policy and the re-election of our remuneration committee chair, Elizabeth Corley.”
“Naturally, we acknowledge this feedback and thank those shareholders who have already spoken with us and explained their reasons for not supporting the relevant resolutions. The remuneration committee is committed to continuing dialogue with our shareholders to help shape the implementation of our remuneration policy going forward.”
Manifest had given the company an E grade – only one up from its lowest grade – for Pearson’s remuneration. The analysis concluded that the total remuneration awarded could be deemed above expectations given the company’s size sector and performance. Manifest also suggested that executive pay packages were excessively weighted toward performance pay.
Other areas of concern raised by Manifest were that the targets had not been disclosed for the annual bonus or long-term incentive plan (LTIP). Additionally, 25% of bonus measures were not disclosed. It was also noted that the LTIP and annual bonus used the same performance measures. Furthermore, the performance conditions for the LTIP and short-term incentive plan had been changed but Manifest said there was not a clear explanation of this for investors.
Last Updated: 9 May 2017