Grafton pay plans for executives are criticised by shareholders group
Plans to boost the amount that Grafton chief executive Gavin Slark and other top brass at the €2bn building materials group can earn under its long-term incentive scheme have been criticised by influential shareholder advisory group PIRC.
PIRC also told Grafton shareholders that it believes the change in Mr Slark's total pay over the past five years is "not commensurate" with the total change in the company's total shareholder return over the same period. Consequently, it said shareholders should oppose approving Grafton's remuneration report at its annual general meeting next month.
Mr Slark was paid a total of €1.35m in 2012 - the first full year of his tenure as chief executive - and was paid £1.5m (€1.76m) last year. That's about a 30pc increase in that period.
But shares in Grafton Group appreciated 260pc between the beginning of 2012 and the end of 2016, and total shareholder return in that period was 300pc, according to figures provided to the Irish Independent by an analyst who covers Grafton. Both figures far outstrip the percentage increase in Mr Slark's total pay.
PIRC said that his overall realised variable pay, including a bonus and awards under the company's long-term incentive plan (LTIP), were not excessive in 2016, however.
PIRC has recommended shareholders oppose a number of other resolutions at the AGM.
Grafton Group plans to increase the maximum amount that Mr Slark can be awarded under its LTIP every year from 150pc to 200pc of his salary. For chief financial officer David Arnold, the ceiling would be lifted from 125pc to 175pc.
While PIRC welcomed the introduction of a minimum holding period of two years for shares that vest under Grafton's LTIP plan, it argued that Grafton's LTIP performance conditions do not operate interdependently and that the LTIP is not linked to any non-financial key performance indicator. It recommended that Grafton shareholders vote against the remuneration policy.
PIRC said shareholders should also reject a proposal from Grafton to raise the aggregate annual limit on fees for directors from €750,000 to €950,000.
"This constitutes a 26pc increase a total aggregate fees, a level which is considered excessive without an adequate justification," according to PIRC. Grafton declined to comment.