Morrisons was hit by an investor backlash today over boss David Potts’ pay, following pressure from voting adviser ISS.
Almost half of the grocer’s shareholders rejected an increase in Potts’ long term incentive package, which was bumped up from 240% of his salary to 300%.
The changes mean he could take home a maximum pay package of £5.3m.
But at Morrisons’ AGM this afternoon, 48.1% of shareholders voted against the directors’ remuneration report.
The supermarket giant is in the midst of a transformation plan under former Tesco executive Potts, who has focused on lowering prices, improving quality and boosting availability since taking the reins in March 2015.
Potts has also targeted capital-light methods of boosting revenues, including penning a supply deal with Amazon, reviving the Safeway brand to sell to independent retailers and bringing third-party services such as Timpson concessions and Amazon lockers into stores.
His strategy has borne fruit, with Morrisons registering its first year of profit and like-for-like sales growth since 2011/12 in the 12 months ending January 29.
The Bradford-based grocer enjoyed an 11.6% jump in underlying pre-tax profit to £337m, while like-for-like sales advanced 1.7%.
However, ISS expresses concern that, while Potts’ LTIP award had been increased, his targets had been reduced and were now too low.
Speaking after the AGM, Morrisons chairman Andy Higginson said: “We consulted widely with shareholders on the new remuneration policy which received strong support with more than 92% in favour so we were surprised not to get a higher vote in favour of the directors’ remuneration report.
“However, we fundamentally disagree with the ISS analysis of the performance targets.
“Not only does the board believe the targets to be significant and stretching, but the judgement on what the right measures are goes to the heart of rebuilding the business for the long term – striking the right balance between investment in the business and continued outperformance.”
Morrisons big four rival Tesco will host its AGM tomorrow and could face a similar revolt.
Britain’s biggest retailer has been criticised by the Pensions & Investment Research Consultants (Pirc) over the £142,000 it paid boss Dave Lewis in relocation costs.