Reckitt faces shareholder protest against chief's pay
Thursday 13 May 2004
Reckitt Benckiser, the household products giant, faces the prospect of a humiliating vote by shareholders today in protest at the £4m-plus pay package of its chief executive, Bart Becht.
City sources said yesterday that Reckitt, whose products include Mr Sheen and Dettol, would be "lucky" if it escaped a substantial vote against its remuneration report at its annual meeting.
Despite Reckitt's strong share-price performance, a significant proportion of its shareholders are opposed to the structure of Mr Becht's pay, which allows him to receive potentially massive share options pay-outs and a large hike in pension contributions.
According to Pirc, the pension fund advisory group, the Dutch chief executive took home shares and share options equal to nine times his base pay last year. That was on top of salary, bonus and pension contributions worth £4.2m.
The way that the package is structured - which attempts to put Mr Becht's pay on an equal footing with that of his US competitors - prompted the Association of British Insurers to issue a "red top" note, its most severe warning that Reckitt's remuneration report should be blocked. Richard Singleton, the director of corporate governance at ISIS Asset Management, said he would vote against Mr Becht's remuneration, saying: "This is well out of line with current practice and we will not be supporting it."
The ABI said it was "regrettable" that it had been forced to issue a red top because the company's performance has been strong, but added: "They've pushed the boundaries of what is best practice."
Next may also be in for criticism at its annual meeting today. While the company has taken account of best practice by shortening directors' two-year contracts to one year in most circumstances, the high street retailer is one of the few companies to retain a provision for a 24-month pay-off for executives if it is taken over.
Separately, GlaxoSmithKline is likely to face opposition to its remuneration policy at its annual meeting next Monday, though it will be nothing like the humiliating defeat it suffered over pay at last year's meeting.
In recognition of the fact that the pharmaceuticals group has reined in some aspects of its directors' pay, Mr Singleton said: "We feel they have come such a long way that it would be churlish not to support them, but we need to watch and make sure the process continues."
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