BSkyB suffered its biggest revolt on pay in years as 37 per cent of independent shareholders who voted were against the remuneration report.
A total of 22.6 per cent of all Sky investors opposed the pay for chief executive Jeremy Darroch and chief financial officer Andrew Griffith – a significant rebellion by City standards.
Critics had complained about a “lack of visibility” around the bonus scheme for the directors, led by Mr Darroch, who earned more than £7m, including a short-term cash bonus of £2m and £4m in share awards in the year to June.
The result at the annual meeting in Edinburgh will be a blow to top shareholder Rupert Murdoch’s 21st Century Fox, which controls just over 39 per cent of the shares. However, his son James, who had to resign as chairman of Sky in the wake of the phone-hacking scandal, got a boost as he was easily re-elected as a non-executive director with 96 per cent support.
The vote on remuneration was the worst that Sky has suffered since at least 2005 as shareholder watchdogs including America’s ISS and Britain’s Pirc urged investors to vote against.
A total of 77.4 per cent of all Sky shareholders who voted were in favour of the remuneration report. But, leaving aside the Fox stake, just 63 per cent of independent shareholders who voted were in favour. Only a very small number of investors abstained. Last year, 88.6 per cent voted in favour of the remuneration report and 11.4 per cent opposed, but there were almost as many abstensions as votes against.
A source close to Sky suggested that some of those who abstained a year ago may have switched to a vote against this year, partly because that was how ISS changed its recommendation.
ISS had complained ahead of today’s vote about “the lack of visibility” around the targets for both annual and long-term bonus schemes – “particularly as there is no retrospective disclosure on these targets for awards that vested this year”. Pirc, known for its highly critical views, claimed bonus awards looked “highly excessive on a potential basis” and the long-term incentive plan (LTIP) lacked an upper limit.
“Based on share price at grant date, the CEO received a combined award under the bonus scheme, the LTIP and the Co-Investment Plan representing approximately eight times his base salary and the CFO received awards equalling approximately 6 times salary,” said Pirc, which also opposed the re-election of James Murdoch.
Sky insisted the rewards were based on strong performance, after a 9 per cent rise in operating profit and 7 per cent rise in turnover.
A spokesman added: “We recognise there can be a difference of views but our policy is working well in support of our overall strategy. The performance of the business is excellent and we are delivering strongly for shareholders.”
The company said it did not offer more visibility about bonus targets because it was commercially sensitive. Danny Rimer, the internet entrepreneur who chaired Sky’s remuneration committee, resigned the role yesterday in a pre-planned move. Standard Chartered banker Tracey Clarke has taken the job.Reuse content