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May 29, 2012 8:52 pm
Investors have voted to approve this year’s pay plans at Lonrho, the London-listed Africa-focused conglomerate, despite a controversy over them that sparked the resignation of a senior independent director.
Sir Richard Needham, the former UK trade minister, quit on Monday after discovering he had not been given a seat on the board’s remuneration committee. He had asked for the position after feeling “bounced into” agreeing the pay package.
Geoffrey White, chief executive, told the Financial Times on Tuesday that the board spent six months deciding the pay package and that Sir Richard had signed off on it. He added: “You can’t just demand to be on a committee.”
Sir Richard’s concerns centred around what he said was a planned 50 per cent salary rise for David Lenigas, executive chairman, and an even steeper one for the finance director, David Armstrong.
The increases proposed at Tuesday’s general meeting were more modest. Mr Lenigas’s salary went up from £500,000 to £550,000 and Mr Armstrong’s from £300,000 to £350,000.
However, Damian McNeela, an analyst with Panmure Gordon, said Lonrho executives’ salaries were still significantly higher than their peers’ on the FTSE small-cap index. “If you look at total shareholder returns, the company has not really delivered all that much more over the FTSE small-cap,” he said.
The company operates in sectors ranging from leisure and transport to agriculture.
It has outperformed the small-cap index over the past three years but underperformed it in the past 12 months. Shares closed down 6 per cent on Tuesday, to 9.67p.
The Association of British Insurers this spring issued an “amber-top alert” to shareholders ahead of Lonrho’s general meeting, with concern centring on pay plans, while shareholder advisory groups Pirc and ISS published reports critical of the pay package.
Analysts are also worried about the failure of top-line growth to deliver profits. The group reported £800,000 in pre-tax profits for the 15 months to December 31, on revenues of £189m, but that was largely because of balance sheet adjustments.
Sir Richard – who serves on the boards of three other public companies – had been with the company since April last year.
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