3 Min Read
(Recasts with shareholder vote)
By Ron Bousso
LONDON, May 16 (Reuters) - Shareholders at British energy services firm Kentz rejected top managers' pay and bonuses on Friday, the first time a London-listed company has been forced to review its executive remuneration policy.
Before 2013, shareholder votes on bosses' rewards at annual meetings were only advisory, but growing public discontent about high levels of executive pay led the government to make the vote binding.
A majority of shareholders in Kentz, which provides engineering and construction services for the oil and gas companies, voted against two resolutions on pay and bonuses at the company's annual meeting.
The revolt prompted a swift response from Kentz, which said it had already started talks with shareholders to resolve the matter.
Under the defeated remuneration plan, Chief Executive Christian Brown was to earn up to $4.4 million including a base salary of $803,400.
One of the main points of contention was a clause allowing Kentz's remuneration committee to offer discretionary payments in "unforeseen and exceptional" circumstances without requiring shareholders' approval, a company official said.
"Management is obviously disappointed but they will consult with them (shareholders) and come back to them," the official said.
Investors holding nearly 38 million shares out of a total of around 84 million shares voted against one resolution with holders of more than 10 million shares abstaining.
On the second resolution, holders of nearly 42 million shares voted against and above 7 million shares abstained.
Historically, investors have voted overwhelming in favour of the resolutions tabled by companies, with typically more than 90 percent suportsing all resultions.
But investors have become more willing to vote against management in recent years, in response to weak corporate performance and perceptions that that pay is excessive.
Nonetheless, it is rare for more than 50 percent of investors to oppose pay or the appointment of directors.
"Any votes that are starting to get into 20 percent of people saying no, indicates it's not just a single vote shareholder and is attracting institutional support," said Alan MacDougall, managing director at shareholder advisory firm PIRC.
"If you look at the oppose votes and the abstentions, anything that gets you over 30 percent when you combine the two is really sending a message to the board."
Earlier on Friday, Kentz said it has a record backlog of orders, defying a slowdown in the industry by offering an upbeat outlook.
Its shares closed nearly 3 percent lower, underperforming a 1.4 percent drop in the FTSE mid-cap index (Additional reporting by Simon Jessop and Tom Bergin; Editing by Erica Billingham)