Balfour Beatty Faces Investor Disquiet as ISS Balks at Pay Plans

  • Investor advisor ISS recommends rejecting executive pay policy
  • Builder says other proxy advisory firms taken different view

Balfour Beatty Plc, the builder behind major U.K. projects including London’s “super sewer,” faces a possible shareholder revolt at its annual shareholder meeting on Thursday as proxy advisor Institutional Shareholder Services Inc. recommended rejecting the company’s future pay policy.

ISS, whose guidance is used by institutional investors casting votes at AGMs, said in a note to shareholders that the levels of executive pay being considered by the London-based company are “inappropriate.” “Shareholder support for the remuneration policy is not warranted,” it said in the note seen by Bloomberg News.

Leo Quinn

Source: Balfour Beatty Plc

Balfour Beatty’s remuneration committee has proposed increasing Chief Executive Officer Leo Quinn’s annual bonus from 120 percent of his salary to 150 percent -- a potential overall increase in remuneration of 13 percent to 3.76 million pounds ($4.86 million). The company is proposing an increase of as much as 14 percent for finance chief Philip Harrison to 1.78 million pounds.

Balfour Beatty said it respects ISS’s position but that other proxy advisory firms had taken a different view, without identifying the groups. “The Remuneration Committee is of the firm view that the changes are necessary, appropriate and in the best interests of shareholders,” the company said in an emailed statement.

Votes on a company’s pay policy are binding following a change in U.K. law in 2014. So far this year no such votes have failed, although a number of companies have modified their proposals in order to win shareholder approval. Imperial Brands Plc, the FTSE 100 tobacco group, withdrew a proposed change to its incentive plan in January when it seemed it might not secure the 50 percent vote needed for approval.

Balfour Beatty in March reported pretax profit of 60 million pounds for 2016, compared with a loss of 123 million pounds last year.

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