Government outsourcer Kier suffered an investor pay revolt on Friday after criticism that chief executive Andrew Davies could earn more than £1m in bonuses despite disastrous profit warnings and a plunging share price.
Kier paid its board a total of £2.1m in the year to June, when the company reported losses of £245m. It also admitted it paid its former chief executive’s home broadband bill for five months after he left.
Although the total pay is down from £5.5m the year before because Kier did not pay any bonuses in 2018-19, 53.9 per cent of shareholders rejected the directors’ pay report at the annual meeting.
Influential shareholder advisory group ISS opposed the pay because Mr Davies could be paid a long-term bonus of up to 175 per cent of his salary, which could equal more than £1m.
Glass Lewis, another investor advisory group, also opposed a pay increase on the grounds there was no “compelling rationale”.
Kier’s shares have dropped 90 per cent over the past year, as its market value has fallen to less than £200m from about £1bn. It is one of the UK’s most shorted stocks, meaning investors are expecting its share price to fall further.
The group also confirmed on Friday that it is on track to make 1,200 job losses by next June.
Kier said: “The company contacted certain of its largest shareholders and will continue to reflect carefully on the points that they have raised. The remuneration committee will engage further with the company’s shareholders and the proxy advisers to understand their views and to decide how to address them.”
The company has revenues of £4.2bn, employs about 19,000 people, and has construction and public services divisions.
It has contracts for the HS2 railway line and operates in areas including refuse collection, as well as building houses and schools.
Stephen Rawlinson, analyst at Applied Value, said: “Shareholders are deeply out of pocket so have sent a shot across the bows. Over-generous payments in this sector are a thing of the past.”
Haydn Mursell, ousted as chief executive in January after a poorly received £264m emergency rescue rights issue, still took home £423,000, down from £1.5m the previous year.
The company said Mr Mursell’s package included the cost of a home broadband subscription, which was paid until the end of June — five months after he had left the company.
At the end of last year, shareholders had refused to buy into an emergency cash call that aimed to reduce Kier’s £624m debt, leaving the banks and brokers that had underwritten the deal nursing almost £7m in losses.
In March it revised debt up by £50m after an accounting error, alarming investors and raising further concerns over the financial health of the company.
It now has debt of £167m, and has outlined plans for £55m annual cost savings, including disposals.
Last week it was ousted from the government’s prompt payment code for failing to honour a commitment to pay 95 per cent of all supplier invoices within 60 days.
Kier ran into trouble after ramping up debt through acquisitions. This type of strategy, aimed at boosting revenues, has felled other contractors including Carillion, which collapsed last year.