Investec Shareholders Should Oppose Pay Policies, PIRC Says

  • Executive pay at bank, money manager excessive, says PIRC
  • Ratio of CEO pay compared to average employee 32:1, PIRC says

Investec Plc’s shareholders should vote against the company’s compensation policy next week because pay doesn’t match performance, according to Pensions & Investment Research Consultants Ltd.

A 1 million-pound ($1.3 million) fixed-pay allowance to all executive directors of the South African and British lender and money manager “circumvents the spirit” of European regulations and should be rejected, the U.K. corporate-governance adviser said. Chief Executive Officer Stephen Koseff’s variable pay is excessive because it “represents more than 500 percent of his salary,” as does that of Managing Director Bernard Kantor, it said.

The re-election of non-executive directors Cheryl Ann Carolus, David Friedland, Ian Robert Kantor and Peter Richard Suter Thomas should also be opposed as they can no longer be seen as being independent because of links to the company or serving on the board for more than nine years, the PIRC report said. The ratio of CEO pay compared to average employee pay came in at 32:1, it said.

Koseff, 65, was paid 4.36 million pounds in the fiscal year through March, a 9.9 percent increase from a year earlier. That was higher than the combined compensation paid to Standard Bank Group Ltd.’s co-CEOs Sim Tshabalala and Ben Kruger in 2015 when converted into rand. Koseff is the only one of South Africa’s five biggest bank CEOs compensated in pounds.

“While Investec’s CEO remuneration is high versus South African companies, we believe that it appears appropriate relative to a smaller U.K. specialist bank and asset manager, Close Brothers Group Plc,” Harry Botha, Cape Town-based banks analyst at Avior Capital Markets, said in a note on July 15. Investec’s compensation policy is in line with South African corporate governance standards and investors should support the proposals, he said.