Fund manager Liontrust is braced for a revolt over the pay packet of its bosses this week, as it faces a potentially fractious meeting with shareholders following its collapsed takeover of GAM.
The London-listed funds group is set to hold its annual general meeting in the City on Thursday but is facing a pushback over a proposed £1.93m compensation package for chief John Ions and a £1.3m payout to finance and operating boss Vinay Abrol.
Ions and Abrol both pocketed six per cent pay hikes this year after bumper salary boosts of 58 per cent and 28 per cent, respectively, last year.
Influential shareholder advisory group Glass Lewis has now recommended investors reject this year’s pay boost over what it said was a failure to factor in a pushback against pay last year, when 48 per cent of investors attempted to block the two executives’ salary boost.
“Glass Lewis has severe reservations about recommending shareholders support the remuneration report at this time,” the company said in its report for shareholders.
“Given what we believe to be a failure to adequately address shareholders dissent, compounded by, once again, significant increases to base salary, we cannot recommend shareholders support the remuneration report at this time.”
Another major advisor, ISS, has recommended shareholders back the plans, however. Glass Lewis’s protest at the pay also comes despite Liontrust capping the bonuses of its bosses and increasing performance targets for the two chiefs in the past year.
A revolt over pay will add to the headache facing Liontrust’s executive team as they face down investors following the collapse of the takeover of Swiss rival GAM last month.
Liontrust faced fierce resistance from GAM shareholders after launching a £96m bid for the firm earlier this year. Around a third of GAM shareholders had backed Liontrust’s deal at final deadline despite the support of GAM’s board.
In its report, Glass Lewis said the collapse of the deal “may raise questions about whether appropriate due diligence had been undertaken” and whether the Liontrust board had a “good sense of whether the terms of the Offer would be sufficiently attractive” to justify the time and cost incurred.
Glass Lewis stopped short of recommending any action from shareholders, however.
A spokesperson for Liontrust said the firm “conducted extensive and co-operative due diligence in relation to GAM, over many months, which validated our view that this was a good and fair offer to GAM shareholders.”
Shareholder advisory groups have become a divisive topic in the Square Mile due to their sway over corporate strategy and a perceived inconsistence in their international voting guidance.
City grandees including London Stock Exchange chief Julia Hoggett have taken aim at the groups over what they see as an inconsistencies betwee the UK and US.
In a blog on the London Stock Exchange website earlier this year, Hoggett slammed the groups for their approach to executive pay, saying they hamper UK firms’ ability to attract talent by “voting against executive pay policies even when those pay levels are significantly below global benchmarks”.