Imperial Brands stubs out its pay policy. But don't cheer too loudly

The company has bowed to pressure, but it still doesn't see the problem

Imperial Brands has stubbed out its pay policy (Getty Images)

Well there’s a thing. Imperial Brands, which used to knock around as Imperial Tobacco, has withdrawn a revised pay policy that could have seen its chief executive handed £8.5m.

The maker of JPS, Golden Virginia, Gauloises and Winston, said it was withdrawing a motion amending its pay policy from next’s week’s annual general meeting, thus avoiding a potential defeat--or at least an embarrassingly large rebellion--by its investors.

Tough on Alison Cooper, to be sure. But I’m sure she’ll manage to muddle through on something closer to the £5.5m she was handed last year. That was, after all, a £2m rise on the previous year.

In one respect the company’s move is very welcome. Shareholders appear to have sent a message loud enough to get it heard even by people who usually turn a tin ear to complaints about pay.

If this signals that institutional fund managers are finally taking the problem of soaring CEO remuneration seriously, and if other boards take note and moderate their excess, then good.

It is, after all, investors’ money that is being poured into the bottomless pit of executive bank accounts, with little evidence that it helps Imperial or any other company deliver economic benefit to them.

On the other hand, if you read what the company’s chairman has written you start to realise that there’s a long way to go before sanity takes over in the British boardroom. And particularly in Imps' boardroom.

Chairman Mark Williamson had this to say: “'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 reengage with shareholders to reach a consensus on this important issue.”

In other words he - and David Haines who chairs the remuneration committee and said much the same thing in the annual report - seriously expects us to believe that £5.5m isn’t enough to persuade Ms Cooper to stick around and keep the world’s smokers happy.

They're talking twaddle, of course. And institutional investors appear to have woken up to the fact that if they ok the £8.5m this time around, Messrs Haines and Williamson will be back to ask them to approve £10.5m or even £12.5m in a couple of years time.

Even though there is no logical reason to pay any more than Imps is already paying its executives.

If the company can’t find a capable person to do the job for £5.5m there is clearly something wrong with its recruitment people. Perhaps that's the next issue for shareholders to raise.

The withdrawal of the new pay policy does represent progress of a sort. But it does rather look like it’s going to take a few more terse conversations with investors to get a message through to this company and probably to quite a few others besides.