TRANSPORT GROUP Stagecoach could be the subject of a shareholder pay revolt after an investor group urged shareholders to vote against the company’s remuneration package at its annual general meeting.
Pensions & Investment Research Consultants (PIRC), which advises pension funds and institutional shareholders, called on shareholders to rebut the remuneration report because of changes that helped the company’s executives reduce their tax bill.
The remuneration committee brought forward the payout date for bonuses to chief executive Brian Souter and finance director Martin Griffiths to avoid the 50p tax rate introduced in April 2010. As a result, Souter received £844,000 and Griffiths picked up £836,000.
“This action raises serious concerns over the committee’s discretion on the vesting of awards,” PIRC said.
Stagecoach hit back, describing PIRC’s position as ‘bizarre and contradictory’, and added: “We find PIRC’s explanations unclear, inconsistent and illogical and we would advise shareholders to ignore them.”
Shareholders may be more inclined to ignore PIRC’s recommendation after Stagecoach proposed returning £340m in cash to investors following a review of the company’s capital structure.
The one-off payment, which represents about one-fifth of its market capitalisation, would amount to 47p per ordinary share and comes on the back of a positive trading statement. The company reported an 8.4% increase in revenues at its main UK rail businesses, while its UK bus revenues rose 2%.
The move is likely to risk the ire of trade unions and commuters, coming just days after commuters were faced with the largest increase in rail fares since the industry was privatised in the mid-1990s.
Griffiths defended the move, saying it had nothing to do with the hike in rail fares. “Our shareholders have made it very clear that they like this – what they don’t like is companies that become fat and lazy and sit on piles of cash,” he said.