Shareholders in United Business Media delivered an unprecedented rebuke to the company yesterday, with more than three-quarters of shareholders voting against a special bonus being awarded to its former chief executive Lord Hollick.
At the annual meeting - Lord Hollick's last after 31 years at the helm of UBM - 76 per cent of the votes were cast against the company's remuneration report, with a further 11 per cent abstaining. Participation of shareholders in the ballot was high, with 259 million shares being voted, or 77 per cent of UBM's issued equity.
Investors were outraged that the media group chose to award Lord Hollick a special fee of £250,000 "based on achievement of a successful handover to the new group chief executive, David Levin". Lord Hollick will shortly receive the payment, despite the protests. Peter Montagnon, at the Association of British Insurers said "the company cannot afford to ignore" the vote.
But, as UBM's chairman, Geoff Unwin, reminded shareholders, such votes were not binding on companies and the media group said it had to make the payment. Mr Montagnon said: "At the very least, the company should defer the payment while conducting due diligence on whether they are really contractually obliged to pay. If, during the course of that process, Lord Hollick decides to waive that payment, that would be an elegant solution.
"If he chooses to waive it, he will be remembered for his performance at the company. Otherwise, he will be remembered for his defiance of 76 per cent of the votes at the AGM."
Lord Hollick, 59, handed over to Mr Levin on 5 April and yesterday he stood down as a director of the company. He will now concentrate on his new role working for private equity group Kohlberg Kravis Roberts (KKR).
One shareholder at the meeting said: "[Lord Hollick's] getting a very substantial reward of £1.5m a year [pay], plus £100,000 to be a consultant [after he leaves]. Why he needs an additional amount, I don't know. Does he want to buy a Porsche Carrera? It's beyond me."
After the event - held in the surreal surroundings of Armourer's Hall in the City, Lord Hollick was unrepentant. "You can rest assured that if I felt that I hadn't earned it [the £250,000 fee], I wouldn't have taken it," he said.
Lord Hollick said he was "going out on a high note", though this was a reference to UBM's recent sale of its market research business, NOP, for a higher-than-expected price of £383m.
During the meeting, Mr Unwin and the head of its remuneration committee, Christopher Powell, repeatedly defended the decision to promise Lord Hollick the bonus and reiterate that the company was contractually obliged to pay it.
One shareholder, Niall O'Shea, representing the Co-operative Insurance Society, said: "In any other job, ensuring a smooth transition would be considered part of normal duties ... why did you commit yourselves contractually to make it [the payment]?"
Mr Powell replied that Lord Hollick's departure was "probably the most extraordinary event in the company's history" and that was why the remuneration committee agreed to the special fee in November when Lord Hollick told them of his intention to leave. "Our motivation was to get through what was going to be a difficult period," he said.
Another shareholder, Clifford Jakes, a former director at UBM, said that when he worked at the company, he would have been "appalled" to be given a bonus for passing on responsibilities to a successor. "This is an insensitive bonus ... the board must be careful with bonuses that are purely subjective," he said.Reuse content