Unilever shareholders have outright rejected the consumer goods group’s executive pay plan in a setback for its new boss Hey Schumacher before starting in July.
Nearly 60% of the votes at the FTSE 100 company’s annual meeting on Wednesday were cast against its compensation report, a scale of outrage rarely seen in the past two decades.
Ahead of the vote, corporate governance experts had challenged Unilever’s plan to pay Schumacher a pre-bonus base salary of 1.85 million euros, almost a fifth more than his predecessor Alan Jope. , who last year received a total compensation of 5.4 million euros.
The rebellion follows investor concern over a lackluster share price performance at soap and mayonnaise maker Hellmann, which was bolstered by a botched £50bn bid for the business consumer healthcare products from GSK.
Jope, a 35-year veteran of the business, said in september that he would stay away. The management change comes after the consumer goods group became the target of activist investor Nelson Peltz.
The vote against Unilever’s pay plan is one of only 13 such rejections by a FTSE 100 company since 2000, according to Sarah Wilson, managing director of proxy voting service Minerva Analytics.
Unilever said it was “disappointed” with the advisory vote, adding: “We are committed to shareholder engagement and will be consulting over the coming months to listen carefully to feedback and determine next steps.”
Shareholder advisory groups Glass Lewis and ISS had urged investors to vote against the company’s compensation plan, raising concerns about Schumacher’s base salary upon his appointment.
ISS said the new chef’s salary was “significantly higher” than that of Unilever’s peers in the UK market and his current salary as head of FrieslandCampina, a Dutch dairy cooperative. Unilever had “not provided a compelling rationale”, ISS added.
Glass Lewis said he generally expected new leaders to be appointed “at a discount to their predecessors”, with “any significant salary increases occurring gradually”.
“Fixed pay is not directly tied to performance and can serve as a crutch when performance falls short of expectations,” he added.
At the time of Schumacher’s appointment, the company said its compensation plans for the new chief executive were “in line with Unilever’s existing compensation policy” and that his salary “places him at the median of our peer companies”. .
Schumacher, who previously worked at HJ Heinz, is due to become Unilever’s chief executive-designate from early next month before assuming the role permanently in July when Jope leaves the board.
The change of CEO comes sooner than expected. Jope was due to retire at the end of the year.
The main shareholders of Unilever are the American fund groups BlackRock and Vanguard, as well as Legal and General Investment Management in the United Kingdom.