A vote on multi-million pound share awards at one of the UK’s biggest companies hangs in the balance just hours before a shareholder meeting that threatens to become a lightning rod for concerns over top City pay.
Sky News understands that Safestore Holdings, the FTSE-250 self-storage company, is hopeful of securing a narrow victory at a special shareholder meeting on Tuesday to approve a new pay policy and long-term incentive plan (LTIP) for top executives.
City sources said on Monday evening, however, that the binding votes were too close to call and that Safestore could yet see its proposals rejected.
A defeat on either resolution at Tuesday’s meeting would mean that the company had effectively lost twice after scrapping plans for a vote on the proposals at its annual meeting in March.
:: Safestore faces revolt over revised pay plans
One investor in Safestore said the board had considered adjourning Tuesday’s EGM, but its decision to proceed suggested that directors were confident that they could secure backing for their proposals.
Under Safestore’s plans, bosses including Frederic Vecchioli, the chief executive, could be handed share awards worth up to 1.6% of the company’s market value under a new LTIP scheme.
Mr Vecchioli and his colleagues would also be eligible for higher annual bonuses, while around 35 other senior managers would also be in line for substantial fixed share awards.
Leading investors and Safestore directors are understood to believe that the proposals represent an important point of principle in the broader debate about boardroom pay.
In a letter to shareholders, Claire Balmforth, the chair of Safestore’s remuneration committee, said the plans addressed “growing disquiet around the ability of the conventional LTIP model adopted by the majority of UK PLCs to appropriately motivate a highly focused management team, and around the suitability of setting performance targets on a three-year cycle”.
Investors believe that Tuesday’s meeting could become a flashpoint in the backlash against boardroom pay, even as Theresa May’s push for greater private sector restraint may have been hampered by her poor General Election result.
Some shareholders believe that Safestore’s plans have not been sufficiently altered from a previous set of proposals withdrawn just hours before they were due to be voted on at Safestore’s annual general meeting in March.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.
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.
The influential IVIS voting arm of the Investment Association has ‘red-topped’ the proposals – the strongest possible warning to shareholders.
In a statement last week, 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.”
The storage group’s existing pay policy expires in October, meaning it must secure approval for a new framework before then, or see the existing policy continue in place.
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.