Morrisons shareholders have voted overwhelmingly against the award of millions of pounds in bonuses to executives who missed profit targets during the pandemic, in a significant rebuke to the supermarket’s bosses.
The chain’s chief executive, David Potts, was awarded an annual bonus of £1.7m for 2020, despite profits falling because of extra pandemic costs. Instead of factoring in the lower profits, Morrisons’ remuneration committee decided to use its “discretion” and adjust its calculations of executive bonuses to ignore Covid-19 costs of £290m.
Potts’s total pay packet was worth £4.2m, a 5% increase compared with the year before. Chief operating officer, Trevor Strain, received total pay of £3.2m – including an annual bonus of £1.3m – up 9% year-on-year, while the grocer’s newly installed chief financial officer, Michael Gleeson, received £1.7m including a bonus of almost £1m.
Only 30% of votes were in favour of the directors’ remuneration report, while 70% voted against, according to the results of a vote at the company’s annual meeting on Thursday.
The vote was a blow to Bradford-based Morrisons, although it was advisory only. A vote on its remuneration policy at 2022’s annual meeting will be binding.
In a statement released alongside the results Morrisons did not mention any plans to adjust the remuneration. It said that the committee would continue to make the case for using its discretion “in a genuinely exceptional year which produced a genuinely exceptional performance from the executive leadership”.
Potts in March described Morrisons’ profits slump as a “badge of honour” because it reflected the costs of feeding the nation and bringing in extra measures such as cleaning and social distancing costs. Annual profits halved to £201m despite soaring sales, £220m less than required by Morrisons’ pay policy for Potts to receive his full bonus.
Morrisons argued that the executives may have missed profit targets, but that they had shown “leadership, clarity, decisiveness, compassion and speed of both decision making and execution”.
“The remuneration committee believed that it was appropriate to apply some discretion to the remuneration of the senior executives,” Morrisons said. “It is a matter of sincere regret to the committee that it clearly has not been able to convince a majority of shareholders – or the proxy voting agencies –that this was the right course of action.”
Potts was re-elected to Morrisons’ board with 99% of the votes. However, there were votes of 16% and 15% respectively against the re-election of Andrew Higginson, the chair of Morrisons’ board, and Kevin Havelock, the head of the remuneration committee that approved the payouts.