Imperial Brands stubs out pay rise for CEO

Shareholders of cigarette giant Imperial Brands seem to have stopped a pay rise for the company’s chief executive Alison Cooper, sending a message to other FTSE 100 companies looking to raise their bosses bonuses.

On Thursday the owner of Gauloises and John Player unexpectedly said it would not put its new pay policy to a vote on 1 February as originally planned at the annual general meeting.

The policy would have had the effect of increasing Cooper’s pay from £5.5m to £8.5m a year from increased bonus opportunities. His pay package has already increased from £3.6m last year.

ISS, a proxy voting agency which has an influence with major US investors, recommended a vote against the pay rise.

Chairman Mark Williamson said investors had change their minds about supporting the plan.

“We have been actively engaging with shareholders for some time and while we received considerable support, it is clear that views have changed over that time and that the right course of action now is for the board to withdraw the resolution,” he said.

“The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business and we will re-engage with shareholders to reach a consensus on this important issue.”

David Haines, who chairs the company’s remuneration committee, said the pay rise was needed – not just for Cooper but other executives – because it was “significantly below the average for companies of our size”.

Stefan Stern, director of the High Pay Centre, said: “This is the first sign that some institutions are going to be a bit tougher this year, so it looks like good news.

“But just as one swallow does not make a summer, one example of effective criticism does not make a ‘shareholder spring’. The question is whether asset managers will continue to engage critically in this way.”

Stren added that the threat of new government policy that will make companies justify high levels of executive pay is encouraging asset managers to act.

Prime Minister Theresa May highlighted pay inequality during her campaign and the government has since published a consultation paper in November that outlined a range of possible reforms.

The announcement from Imperial Brands comes after BlackRock, the world’s largest asset manager, demanded an end to pay awards that outpace ordinary employees in the UK’s biggest companies.

More than half of UK companies will have to go to its investors for a binding vote on remuneration packages this year according to BlackRock.