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Safestore faces humiliating second pay revolt


One of the UK’s biggest listed companies is facing the humiliating prospect of a shareholder outcry over a revised executive pay scheme less than four months after being forced to scrap a previous set of proposals.

Sky News has learnt that Safestore Holdings, the FTSE 250 self-storage company, could become the first big company to see a binding vote on its future pay policy effectively defeated twice by shareholders.
Such a result would risk becoming a further flashpoint in the backlash against excessive boardroom pay, even as Theresa May’s push for greater accountability among private sector bosses may have been hampered by her poor General Election result.‎Safestore is due to hold a special meeting next week to secure support for a new remuneration policy and long-term incentive plan.
The proposed new scheme could hand executive directors including Frederic Vecchioli, the chief executive, millions of pounds in bonuses and share awards.
Sources said the plans had not been sufficiently altered from a previous set of proposals withdrawn just hours before they were due to be voted on at Safestore’s annual general meeting in March.‎At least two of the voting advisory services which guide institutional investors on resolutions‎ put forward at ‎company meetings are withholding their support from the proposals, according to documents seen by Sky News.
ISS, which often influences the voting decisions of around 25% of investors, said that votes against Safestore’s pay policy and the long-term reward scheme were warranted.
“Despite a reduction in quantum as compared to the original proposals, the new framework will nonetheless provide a significant (up to c.1.6% of the issued share capital) reward opportunity to the executive directors, for which the underlying rationale remains not particularly compelling,” ISS’s report to clients said.
“In parallel, there is an increase in annual bonus award opportunity.
“Altogether, the new remuneration policy will significantly enhance the total potential remuneration package.”
The prospect of a defeat by investors would cast Safestore into uncharted territory, since no listed company has so far failed to secure backing for a new pay policy since three-yearly binding votes were introduced by Sir Vince Cable, the then Business Secretary.

The storage group’s existing pay policy expires in October, meaning it must secure approval for a new framework before then.
However, sources said that in addition to ISS’s opposition, the influential IVIS voting arm of the Investment Association had decided to ‘red-top’ the proposals – the strongest possible warning to shareholders.
A person who has seen IVIS’s report said there remained concerns about both the structure and scale of the prospective rewards.
In a statement issued on Tuesday, a Safestore spokesman said: “We have engaged extensively with shareholders, listened to their concerns and revised our proposed remuneration policy accordingly.
“The new proposed five-year LTIP (long-term incentive plan) is structured to reward success, extending beyond the board to the wider management team.
“The board believes that the policy is right for the company and for all shareholders to continue the success of the last three years.‎”
Alan Lewis, Safestore’s chairman, had described the original plans as “innovative” but had vowed to “engage in dialogue with shareholders to find a solution that best meets the needs of all”.
Safestore is far from the only listed company to run into difficulties over a proposed pay policy this year.
Imperial Brands, Pearson, Thomas Cook and TP Icap have all either withdrawn resolutions or suffered bloody noses from binding policy votes or advisory votes on the previous year’s pay.

Source: Sky

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My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

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