Glass Lewis turns spotlight on executive bonuses at Cairn
Cairn Homes, the London-listed residential developer, has failed to clearly explain how its executives are compensated, according to influential proxy advisory firm, Glass Lewis.
The censure may contribute to another display of shareholder discontent at the company's annual general meeting in Dublin this morning.
Cairn, which tapped markets for €52m yesterday, returned to profit in 2016 on the back of surging demand for new homes and more flexible lending conditions for first-time buyers. The company faced acrimony from investors last year when 13pc of the register voted against the remuneration report. Glass Lewis and ISS both urged shareholders to greenlight the issue this year.
But Glass Lewis caveated its support, raising concerns over the structure, and lack of detail, on Cairn's short and long-term bonus schemes and cautioned shareholders to "remain mindful of the issues raised in our analysis".
Michael Stanley, the CEO and founder of the home builder, raked in total compensation of €924,000 in 2016, which included a €446,000 bonus.
Glass Lewis emphasised the annual bonuses awarded to Cairn's executives are higher than the sums offered under a long-term incentive plan (LTIP), encouraging a focus on short-term gains, "potentially at the expense of long-term growth".
Glass Lewis also criticised the lack of disclosure over "specific metrics and targets" used under the bonus scheme. It also argued there was "no clear description" of the performance hurdles used for the company's discontinued LTIP. Cairn, which was listed in 2015, is seeking investor support today for an overhaul of its LTIP. The new scheme will enable employees to earn 200pc of base salary.
Despite the focus on remuneration, analysts are quick to point out the company remains on course to meet upgraded management targets of 375-400 completed home sales this year.