Say-on-Pay: high packages pass, as long as they respect the processes
This week was the kick-off of the AGM season for the CAC 40, France’s leading index. At the same time, Scalens followed 30 meetings around the world. The novelty came from a meeting in Finland: Fortum’s majority State shareholder voted against the executive’s remuneration, but its consultative vote was ignored because Finnish state is a minority on the Board.
13 April, Helsinki, general meeting of the energy company Fortum. This is the second rejection, after Credit Suisse on 4 April, admittedly a special case. The absolute amount of the remuneration of Markus Ramauro, Fortum’s CEO, is not in question. It was for 2022 of 2.7 million euros, less than half of most of his peers. But Fortum had not met its CSR targets. The Board, considering that the underperformance was solely related to the Uniper business, which was sold at the end of 2022, decided to grant the CEO 50% of his target variable. The Finnish state, which is a minority on the Board but has a majority stake in the company, voted against this vote, which in Finland is only consultative. As soon as the meeting was over, the Board issued a statement saying that it would not change anything.
Fortum case is emblematic of the behaviour of the 2023 investors, be it the Finnish state or the American pension funds. It is not the amount that is at issue, but the process. In Stellantis, the shareholders only narrowly voted (51%) for the 51 million euro bonus of Richard Manley, the former CEO of Chrysler, because it had not been foreseen – described as ‘exceptional’. When they are warned and believe that the request is justified, investors agree, even for very high values. Proof of this is that this year they approved 80% of Carlos Tavares’ 23 million euros, duly presented, whereas they had rejected his 35 million euros in 2022 with 52% of votes against, arguing that they did not correspond to what was planned. Similarly for Teleperformance, where Daniel Julien’s 20 million euros passed with 75% approval.
The companies, which are more prepared to be challenged on the absolute amount and social fairness of remuneration, systematically make a presentation on value sharing – even Stellantis, which balanced its executives’ bonuses against the €2 billion paid in salaries to its employees.
The question and answer sessions are getting longer by 10 minutes. The average at the beginning of the year is 40 minutes, with extremes. Delhaize, the leading Dutch retailer, had a session that lasted over two hours. Vinci’s, in France, lasted more than an hour. Xavier Huillard, the CEO, reluctantly had to cut it short, directing the shareholders to his Director of Communications. At Iveco, the commercial vehicle manufacturer controlled by the Agnelli family, the lawyer chairing the meeting was stiffer: from the outset, he specified that it would be a maximum of five minutes per shareholder.
The season continues this week with BOEING, HEINEKEN, and in France the luxury giants LVMH, L’OREAL, HERMES. In all, 60 meetings are monitored by Scalens.
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