Darty, the struggling electrical retailer, is set to be the latest to face a battering over executive pay at its forthcoming annual meeting thanks to the substantial “golden hello” handed to chief executive Thierry Faleque-Pierrotin.
PIRC, the corporate governance watchdog which advises some of Britain's biggest pension funds, has urged them to oppose the company's remuneration report over the award of 772,681 shares to Mr Faleque-Pierrotin in January, worth nearly £370,000 at yesterday's closing price of 47.75p.
Investors were under the impression that such an award would not be made given current difficulties. Its 2009, the Annual Report indicated that a performance condition had been attached to the share award which has not been met. But, on Friday, Darty said the report contained an error and the only condition Mr Faleque-Pierrotin had to fufill was to remain with the company for three years.
The share value has plunged in recent years. They were still above £3 at the end of 2007 and traded at above £2 in early 2008. Since then, it has been a rout. They were buffeted at the beginning of the year thanks to a poor Christmas and a brief recovery has petered out.
The company recently rebranded itself as Darty – the name of its main French chain – and dropped the title “Kesa Electrical” after the sale last year of its beleaguered British business, Comet, to a private equity firm for a nominal £2.
In a regulatory announcement on Friday, it said Mr Falque-Pierrotin gave up option and stock entitlements linked to his previous employment worth at least €775,000 (£616,000) when he joined the company.
“The remuneration committee, as part of his recruitment package, agreed at that time to compensate Mr Falque-Pierrotin through a one-off conditional share award, with the only condition to vesting being his continued employment with the Company for three years.
“The 2009 Annual Report and Accounts erroneously stated that a TSR performance condition also applied; this was not the case,” Darty said in a statement.
But PIRC remains critical. Its report into Darty says: “We continue to recommend opposition to the remuneration report as PIRC does not support the use of 'golden hellos' as they only serve to undermine the retention aspect of all bonus schemes. This recommendation would normally be made at the time the payment was made, however, as it was originally disclosed as a payment under the Performance Share Plan subject to Total Shareholder Rerturn performance this was not possible. We are therefore expressing our concern on the matter on this year's remuneration report.”
The company's AGM will be held on 13 September.