Bakery chain Greggs is facing a potential shareholder revolt over high pay for its executives after criticism by two respected investor advisory groups.
Bonus payouts for Greggs’ outgoing chief executive Roger Whiteside amounted to more than double his basic salary of £575,209, taking his total package to £1.9m including benefits.
As a result the adviser, Pirc, said shareholders should vote against the baker’s remuneration report at the group’s annual meeting on 17 May, noting that Whiteside’s pay was excessive and amounted to 79 times that of a regular employee.
Meanwhile the proxy adviser Glass Lewis pointed to a 11.4% rise in basic pay for Greggs’ finance chief, Richard Hutton, last year which was followed by a 3.5% increase this year to £393,300.
He is also lined up for an exceptional share bonus payout of 150% of salary despite the fact Greggs did not pay back £87m in government furlough support received in 2020. Greggs did pay back £4.9m in furlough support received last year.
Greggs said it had approved the higher potential payout for Hutton this year because he was “critical in helping to support [the] transition” from Whiteside to new boss Roisin Currie.
“The committee believes his knowledge and experience will be essential and therefore his long-term incentive award should be appropriately pitched to reflect the key contribution he is expected to make over the next few years,” the company said.
However, Glass Lewis said Greggs’ board has “failed to provide a robust rationale” for the higher than usual bonus for Hutton – which would usually be limited to a maximum of 125% of salary.
Greggs’ remuneration committee said its annual bonus scheme had been “designed to ensure that bonus payments would only be made for appropriately stretching levels of performance”.
It added: “The committee is cognisant that the payout of the bonus is very near to maximum but is satisfied that this outcome aligns well with the business performance in what were tough trading conditions in 2021.”
On the additional share bonus, it said it was “very comfortable that vesting is justified”.
The criticisms of Greggs come after a string of shareholder rebellions over pay this spring.
Almost 30% of shareholders in Ocado rebelled against high pay for directors at the online grocery specialist earlier this month after it laid out a plan to pay the chief executive, Tim Steiner, up to £100m over the next five years.
And just over 38% of shareholders who voted came out against a new bonus scheme at GlaxoSmithKline which raised the annual bonus for executives at the drugs group from two times to three times their salaries.
Almost a third of Standard Chartered’s shareholders voted against executive pay at the bank’s annual meeting, after advisers criticised the bank for not sufficiently cutting bonuses in the wake of a record UK regulatory fine.
Nearly 11% of voting shareholders opposed the pay policy at Barclays on the same day.
However, NatWest executives avoided a shareholder rebellion despite a controversial new pay policy that could net its chief executive, Alison Rose, as much as £5.2m a year. Nearly 93% of shareholder votes were cast in favour of the policy last month.