Nearly one in five shareholders refused to support the remuneration report of Marks & Spencer yesterday at its annual meeting, as they rebelled against the £15m its new chief executive Marc Bolland could earn this year.
The bloody nose given to M&S over its executive pay is the latest given by investors to a string of blue-chip companies. There were similar votes at the annual meetings of the mining group Xstrata and the consumer-goods company Reckitt Benckiser.
When the 8 per cent abstention vote is included, 16 per cent of shareholders failed to back the remuneration report, with 83.8 per cent supporting it. This is above the average levels of opposition or abstention for votes on executive pay this year.
Pirc, the corporate-governance body, and the Association of British Insurers had both urged investors to vote against the resolution on executive pay. More specifically, Pirc had highlighted the "highly excessive" executive pay at M&S and the lucrative package given to Mr Bolland, who could earn up to £14.8m this year, although £7.5m of this is compensation for bonuses accrued in his previous post at Morrisons.
After the vote yesterday, a Pirc spokesman said: "The 'golden hello' [for Mr Bolland] was the most important issue this time around. Whilst people have welcomed the appointment of Mr Bolland, some shareholders are not happy with the pay arrangement. This is something the company needs to look into." However, he conceded: "We would have liked to have seen a larger level of opposition."
Sir Stuart Rose, the chairman of M&S who was overseeing his last AGM as he will step down by March 2011, remained defiant over the remuneration vote, referring to 91.4 per cent of shareholder votes cast in favour of the report, excluding abstentions.
Sir Stuart also defended Mr Bolland's pay by saying he was "the right man to take the business forward". He stressed that only Mr Bolland's pension and salary were guaranteed, and that 85 per cent of his package would be performance-related.
As usual, the chairman turned on the charm for the army of private shareholders who always attend the event. On several occasions, Sir Stuart received rapturous applause. The event was also characterised by a series of quirky questions from the floor, including how the trays are cleared in its cafés and the quality of its socks. Sir Stuart has also faced criticism for the £875,000 salary he gets from the end of this month when he becomes non-executive chairman. Last year, the chairman took home total pay of £4.3m, including a cash bonus of £1.13m and a reward in deferred shares of £1.69m.
However, both he and Mr Bolland received resounding votes of around 96 per cent in favour of their re-election to the board.
M&S delivered a 5 per cent rise in underlying profits to £633m for the year to 27 March, although this was down sharply from the £1bn delivered in the year to March 2008.
Shareholders also expressed their dismay at the fact that M&S trimmed its dividend last year and that its share price, which closed at 349.1p yesterday, remains below the 360p on Sir Stuart's first day in 31 May 2004.
However, Sir Stuart cited the £4.6bn in share buy-backs and dividends it had returned to shareholders over the past six years. Furthermore, he was applauded for helping to fight off a takeover by the retail tycoon Sir Philip Green in 2004.
Mr Bolland, who will unveil his thoughts on his strategy for M&S in November, told the gathered shareholders: "Yes, there will be change, but it will be building on the things that are good." Sir Stuart said that Mr Bolland, who took the helm at Morrisons in September 2006, was a "stayer", adding he wanted to be at M&S for a "substantial" period.