Diageo cuts CEO pay by over £1m
Guinness producer Diageo has cut the pay of its two top executives after the distiller missed performance targets, joining other UK companies in reining in management awards amid political and investor calls for restraint.
The company cut the variable portion of CEO Ivan Menezes' compensation by 35pc, reducing his total pay for the latest financial year to £3.4m (€3.75m) from £4.5m a year earlier. That part of chief financial officer Kathy Mikells' package was reduced by half, the company said in its annual report published yesterday.
Mr Menezes and Mr Mikells are the latest of a number of UK executives whose pay has been cut after Prime Minister Theresa May decried the "irrational, unhealthy and growing gap" between compensation of managers and ordinary workers. Bosses of companies in the FTSE 100 Index made an average of £4.5m last year, down 17pc from 2015.
Diageo sets variable pay, including some share awards, based on average financial performance over the previous three years, gauged by the shareholder return, profit margin and sales growth. While net sales grew 4.3pc in the 12 months that ended June 30, performance was weaker in the previous two years.
Diageo has stepped up efforts to boost its performance by selling assets such as the Gleneagles Hotel in Scotland and some wine brands to focus on its core whiskey and vodka lines. The company's shares have risen since the UK's vote to leave the European Union weakened the pound, lifting the value of overseas sales when converted into sterling. (Bloomberg)