BAE says executive pay plans “in line with best practice” as it faces shareholder revolt
BAE Systems has defended its executive pay proposals as "in line with best practice" as it faces off against less-than-impressed investors.
Under the firm's suggested pay plans, Charles Woodburn, who is due to take over at the helm of the defence company from Ian King in July, could pocket multiples of his salary in bonuses and share options.
Now the Sunday Times has reported two of the FTSE 100 company's top shareholders are set to reject the deal.
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"The maximum award potential for the company's chief executive has remained the same since 2013," a BAE spokesperson said. "Our remuneration policy is in line with best practice and other FTSE companies and in a recent consultation with our major shareholders only one raised a concern."
Woodburn, who is currently BAE's operating chief, will bag himself a base salary of £875,000 on promotion. However, the Sunday newspaper reported the bonus and share option schemes could boost his total pay packet to be worth more than £7.5m.
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The defence firm recently reported sales of £19bn and operating profits of £1.7bn for the year to December 2016.
The news of the potential shareholder standoff comes as the government is currently mulling feedback from a consultation on corporate governance and executive pay, which closed for submissions last month.
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Among the contributions, asset manager Fidelity International has called for boardroom pay committee chairs to step down if their plans fail to garner favour with 75 per cent of their company's voting shareholders, while a group led by the Investment Association has urged ministers to consider imposing an automatic binding vote for firms whose pay deals were voted against by more than a quarter of shareholders the year before.
BAE Systems is far from the only firm to spark shareholder ire over bumper pay for top dogs in recent weeks. Glaxosmithkline is reported to be facing off with shareholders demanding the pharma firm pay incoming chief exec Emma Walmsley less, while investors at TP Icap have proposed pay plans for the newly merged broker firm back should be sent to the drawing board.