Dundrum owner Hammerson hit by revolt over pay
Hammerson executives have been left chastened after shareholders in the UK group - which owns half the Dundrum Town Centre in Dublin - baulked at what they see as excessive pay for the group's directors.
In a resolution to approve Hammerson's remuneration report at its annual general meeting, almost 30pc of the shares cast were against the motion - a significant blow for a listed company.
Prior to the meeting, investor advisory firm Institutional Shareholder Services (ISS) recommended that the pay report be voted down because of concerns over stock awards and bonuses worth millions awarded to top executives, including boss David Atkins.
ISS said such awards flew in the face of Hammerson's declining share price and a failure to achieve financial targets.
Apart from its 50pc stake in the Dundrum Town Centre, Hammerson owns also owns half of the Pavilions shopping centre in Swords, and 50pc of the Ilac Centre. It also owns 41pc of the Kildare Village outlet mall.
While the so-called 'say on pay' at the Hammerson annual general meeting is non-binding, such votes are notable because they can indicate that major investors may be unhappy with pay structures.
After the AGM, Hammerson said it noted the opposition to its remuneration report.
"The board understands the concerns of some investors, but notes that the reward structure is in line with the remuneration policy and recent previous practice," it said.
"No bonuses were awarded to the continuing executive directors for 2018, and the LTIP [Long-Term Incentive Plan] which vested in 2018 had, when it had been granted in 2014, been reduced by 50pc from the normal policy level," it said.
"In the coming months the remuneration committee will be undertaking its regular triennial review of the remuneration structure and quantum, prior to submitting the revised remuneration policy to shareholders at the AGM in 2020.
It said that as part of that review, the views of shareholders and voting agencies will be considered "to ensure that executive reward continues to be aligned with shareholder interests".
In February Hammerson, which also owns the iconic Bullring shopping centre in Birmingham, swung to a loss after a year of retail failures put pressure on property values.
It booked a loss before tax of £266.7m (€310.3m), compared with a profit of £413m (€480.6m) in 2017.
A year ago, it also aborted a £3.4bn (€3.9bn) takeover tilt for rival Intu, and fought off a £5bn approach from France's Klepierre.
Earlier this year, Hammerson CEO David Atkins outlined a planned sale of £500m worth of assets in 2019, but said the group is in discussions regarding the potential sale of up to £900m of assets.
In agreement with activist US investor Elliott Advisors, Hammerson said it will ditch more assets across Europe, including retail parks, to cut debt amid a hugely challenging time for UK retail.
Elliott owns somewhere between 5pc and 10pc of Hammerson.
"Our goal is to bring net debt levels down from £3.4bn (€3.9bn) currently, to around £3bn," said Mr Atkins, reiterating its medium-term plan to exit retail parks.
"If we get an offer for an asset at an attractive price and we believe it's a good deal for shareholders, we will take that opportunity," he said at the time.
Chief executive David Atkins said: "2018 was a tough year, particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values."
Major retailers such as Maplin and House of Fraser went into administration last year, while many others used a form of insolvency known as a company voluntary arrangement to shut stores.
Most recently, department store operator Debenhams went into administration. It has been hit by a sharp slowdown in sales and rising rents.
Hammerson's boss in Ireland, Simon Betty, said this year that the group has ambitious plans for its assets here, and confirmed it will seek planning permission to build 100 apartments beside the Dundrum mall later in 2019. That scheme will cost €40m to develop and is the first of a total of 600 units Hammerson envisages beside the centre. Hammerson said footfall at its three flagship Irish properties in 2018 was just under 50 million.
Additional reporting PA