Morrisons faces investor showdown after pay revolt

Morrisons faces heated discussions with investors over pay after more than a third of shareholder votes opposed the supermarket group's remuneration policy at its annual general meeting.

Almost 35% of votes at Thursday's virtual AGM went against the remuneration policy - an unusually high level of rebellion at a FTSE 100 company. Shareholders cast binding votes on companies' pay policies ever three years. The pay report for 2019 was approved by 97% of votes.

The policy kept pension contributions for Chief Executive David Potts and Trevor Strain, chief operating officer, at 24% of salary this year with the company's contributions reducing in subsequent years. UK governance rules say bosses' pension contributions should be in line with those of other workers. Morrisons' employees pension rate is 5%.

Morrisons said it consulted shareholders before presenting the pay policy to the AGM and that remuneration committee chair Kevin Havelock would hold further talks with investors and report back to the board. It is unusual for a big company to misread shareholder sentiment over contentious matters such as pay and pensions.

"Although the policy vote passed, and we received considerable positive feedback during consultation, the board acknowledges a number of shareholders decided to vote against the policy," Morrisons said.

High company contributions to bosses' pensions became a battleground in investors' oversight of lavish rewards because they were seen as a backdoor method for paying more to top executives. A revamp of the UK's governance code last year said executive directors' contribution rates should be aligned with those of the workforce.

Shareholders also registered chunky protests against Morrisons' Chairman Andrew Higginson, whose re-election was opposed by almost 13% of votes, and non-executive director Belinda Richards, who was opposed by a fifth of votes.

Morrisons said Richards was opposed by "a small number of institutional shareholders" taking a hard line on the number of jobs directors have. The company said Richards dedicated plenty of time to her work for Morrisons, which includes chairing the audit committee, and that it would continue talks with shareholders.

Morrisons' website says Richards has four other non-executive directorships, including at Avast and Phoenix Group, and is a trustee of the Youth Sports Trust.