One in three WH Smith shareholders rebelled against the struggling retailer's boardroom pay policies yesterday by either opposing or abstaining from a vote to approve its remuneration report.
The group, which issued a profits warning after a disastrous Christmas, failed to quell shareholders' unease about the £2m package awarded to Kate Swann, its new chief executive, and its decision to defy the City corporate governance code by promoting Richard Handover from chief executive to chairman.
John Cruickshank, one of 50 private investors who braved snow and ice to attend the group's annual meeting in central London, attacked Ms Swann's £220,000 guaranteed bonus, asking: "What is a bonus that's guaranteed? Simply an extra salary." He added: "She is getting an awful lot of money for just being here. It certainly isn't an incentive to do a brilliant job." George Bett, from Fife, shamed Ms Swann into admitting that although she was given 141,000 shares in WH Smith when she joined in November, she had not spent any of her own cash on buying shares. "So she has no faith in the company?" Mr Bett asked.
Even the group's pledge to launch an immediate search for a new chairman did not satisfy some shareholders. One told Mr Handover: "I was not in favour of you becoming chief executive in the first place. I am even more unhappy that you have become chairman on the same salary as before ... £400,000," adding that Mr Handover "should go now". Mr Handover was due to remain chairman until 31 January 2005, but has signalled to some of the company's institutional investors that he will leave once a replacement is found. His elevation to chairman followed Martin Taylor's abrupt resignation due to ill health.
The size of the potential payout to Beverley Hodson, who ran the group's UK shops until she was sacked earlier this month, was another area of concern. One shareholder asked the company to "bear in mind that she mucked up Christmas" when deciding how much to award her in compensation.
Around 100 million shareholders backed the group's pay plan, but 34 million voted against it and a further 17 million abstained.
Separately, the company signalled its intention to sell its 204 stores across Asia and announced the appointment of Walker Boyd, the finance director of the jeweller Signet, as a non-executive director. The company is also reviewing whether to pay a final dividend.