Melrose Industries, the buyout group behind the £8bn hostile takeover of UK engineer GKN, has suffered an investor protest over pay but avoided a rebellion on the scale of last year.
At the Melrose annual shareholder meeting on Thursday, just over 12 per cent of votes cast by institutional investors opposed its remuneration report, the company said. The votes of smaller private investors, who were balloted at the AGM, have not yet been included in the figures.
Last year, more than a fifth of shareholders rejected the remuneration report after Melrose’s top four directors each received at least £42m in 2017 because of a long-term incentive plan. A 20 per cent or more vote against is considered a significant protest.
Glass Lewis, one of the world’s largest proxy advisers, which give investors guidance on how to vote at annual meetings, had recommended against backing the remuneration report. It said that the company — and a number of its board members — had given a “poor response to repeated shareholder dissent”.
Chief executive Simon Peckham’s total remuneration was £1.05m in 2018, while Melrose’s top executives received an increase in base salary of 3 per cent.
After the AGM, Melrose said: “As far as we can see, not a single top twenty Melrose shareholder voted according to [the Glass Lewis] recommendations.”
One of the founders of the company, David Roper, also announced on Thursday that he would retire at the end of May next year. He is the first of the three original founders to leave.
The company’s business model involves buying struggling manufacturing businesses with a view to improving performance and selling them at a profit. Melrose’s delivery of strong returns over the years has made it a favourite among many investors.
Mr Roper was chief executive for nine years from the company’s flotation on the Alternative Investment Market in 2003, and has overseen a number of deals that built the company’s reputation, before becoming executive vice-chairman.
Mark Fielding, an analyst at RBC, said: “While David had been a key figure for the group and is one of the four main managers . . . with his transition out of the chief executive role having been a number of years ago, we believe that Melrose can continue successfully post his departure.”
Before Thursday’s meeting, the Unite trade union urged shareholders to press the Melrose board to rethink its decision to close a GKN aircraft components factory in Birmingham and to vote against the remuneration report.
Chairman Justin Dowley said: “By taking this difficult decision now, GKN Aerospace will be able to carry out a carefully managed site wind-down process over a period of more than two years for the benefit of all stakeholders.”
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