Estate agent and cinema chain suffer backlash over reward packages handed to bosses during Covid crisis
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Last modified on Wed 12 May 2021 14.36 EDT
The estate agent Savills and Cineworld, the UK’s biggest movie chain, have been hit by significant pay revolts by shareholders in a backlash over reward packages awarded to bosses during the pandemic.
Almost 30% of investors in Britain’s largest cinema chain failed to back a controversial new award scheme that could see bosses awarded more than £200m in shares if Cineworld’s shares bounce back to pre-pandemic levels.
Cineworld, which will begin reopening its 127 UK sites next week as pandemic restrictions are lifted, reported that 27.7% of investors either voted against the share award scheme or abstained, which is often viewed as a protest vote.
In addition, 27.8% failed to approve the company’s remuneration report at its annual general meeting on Wednesday. And 15.7% of investors abstained or voted against the reappointment of Dean Moore, the chair of Cineworld’s remuneration committee.
The company, which has secured more than $1bn in financial lifelines to weather the pandemic, reported a record $3bn (£2.1bn) loss for last year as cinema closures took its toll.
But if the company’s share price can return to pre-pandemic levels, its chief executive, Mooky Greidinger, and his brother and deputy Israel, will receive awards worth £33m each.
Mooky was paid £791,000 last year, less than half the £1.68m he received in 2019, after the company moved to cut bonuses and share awards in light of the pandemic. Israel was paid £650,000, compared with £1.3m in 2019.
However, Cineworld’s directors and non-executive directors are to receive a total of £1.1m for taking a pay cut between April and June last year, which is due to be paid “at a later date”, according to its annual report published last month.
Responding to the vote the company said that it would “continue its dialogue with shareholders on remuneration matters”.
At Savills, the subject of a rare “red top” warning from the Investment Association, more than a quarter of investors failed to approve the company’s remuneration report at its annual meeting.
The company paid Mark Ridley, the chief executive, a £350,000 bonus despite failing to hit the minimum profit target required to trigger an award last year.
The company, which made pre-tax profits of £84.7m last year versus the minimum requirement of £120m, also paid Ridley £500,000 for meeting 90% of his separate “key objectives” during the pandemic.
Almost a fifth (19.6%) of investors voted against the company’s remuneration report, while a further 6.1% abstained.
“The board understands that shareholders’ primary concern was its decision to take into account a wider number of operational and strategic performance metrics than the profit targets set prior to the pandemic,” Savills said.
“The board is satisfied that its recommendation was made in the best interests of all stakeholders. In light of the voting outcome … [the company] will engage with our leading shareholders over the coming months.”
Cineworld was braced for a pay revolt after investor advisory services said the new policy was excessive, but only 30% of shareholders voted against the plan at a special meeting in January.
The schemes, which required 50% voter approval to be implemented, were never in any real doubt of being passed as the Greidinger family control 20% of Cineworld.
The proposed long-term incentive plan will reward the company’s senior executive team if Cineworld’s share price bounces back to 190p within three years. If this level – which is close to its pre-pandemic level of 197p – is reached, bosses will share £104m.
If the share price reaches the upper cap of 380p, executive directors would between them be awarded shares worth a total of £208m. Shares were trading at 91.6p on Wednesday.
Cineworld’s 5,500 UK staff have been out of work since October, when the company closed all its 127 sites indefinitely after the announcement that the release of the next James Bond film would be delayed until later this year.
The world’s second-largest cinema chain, which includes almost 540 sites in the US, started reopening in north America on 2 April.
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