Tobacco giant Imperial Brands scraps chief executive pay rise after shareholders discontent

The company behind Gauloises and Winston cigarettes admitted it faced anger from investors about plans to increase the pay of chief executive

Imperial claimed it feared being unable to attract the very top talent as the level of pay it offered had fallen behind rivals (Rex)

The chief executive of Imperial Brands, the maker of Gauloises and Winston cigarettes, is unlikely to get a pay rise this year in what seems to be another battle over boardroom greed.

Alison Cooper received a total pay package of £5.5m in the last financial year, up from £3.6m the year before.

A new pay policy that would have had the effect of taking Ms Cooper’s remuneration to £8.5m in 2017 was expected to be put to a shareholders’ vote on 1 February. However, in an announcement to the stock exchange on Thursday, Imperial Brands said it would not put the policy to a vote as originally planned.

Mark Williamson, chairman of Imperial Brands, said: “We have been actively engaging with shareholders for some time and while we received considerable support, it is clear that views have changed over that time and that the right course of action now is for the board to withdraw the resolution.

“The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business and we will re-engage with shareholders to reach a consensus on this important issue.”

Stefan Stern, director of the High Pay Centre, an independent non-party think tank established to monitor pay at the top of the income distribution, told The Independent that the move was “encouraging”.

He said: “This is only the first example and we have to be careful to not get carried away, but it is an encouraging sign if it means big asset managers are going to engage more effectively and critically over executive pay.”

Mr Stern added that the threat of a new government policy to make companies justify high levels of executive pay is perhaps encouraging asset managers to act.

James Laing, deputy head of UK and European Equities at Aberdeen Asset Management, said: “It is rather late in the day to be listening to shareholder concerns, but nonetheless welcome. Remuneration policies need to be simple and reflect the broad context. Hopefully when it comes to formulating the revised remuneration policy this will be fully reflected in the engagement with shareholders.”

The move comes after BlackRock, the world’s largest asset manager, last week demanded an end to pay awards that outpace ordinary employees at the UK’s biggest companies ahead of a round of critical shareholder votes in 2017.

This year more than half of UK companies will have to go to investors for a binding vote on their remuneration packages, according to BlackRock.

Prime Minister Theresa May has promised to tackle the issue and the Government published a consultation paper in November that outlined a range of possible reforms.