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At SIG Group’s general meeting on 9 July, 44.07% of shareholders voted against a resolution to approve a one-off payment of £375,000 to chief executive officer (CEO), Steve Francis. The move was put forward as part of a strategy plan to dig the former FTSE 250 construction company out of its struggles, which include a £112.7m pre-tax loss for the year reported in May 2020, the company’s decision to bulldoze its dividend, and the forecast of a 500-million-pound hit to 2020 revenue having experienced a drop in demand due to coronavirus.

In addition to gaining shareholder approval of Francis’ strategy plan, shareholders were asked to sanction a £165m capital raising backed by American private equity investor Clayton, Dubilier & Rice. In its , the company explained that the £375,000 payment was conditional on completion of the fundraising, in which Francis had agreed ‘to invest £150,000 of his own money in New Ordinary Shares.’ in return.

Francis was appointed on a permanent basis on 24 April 2020 after two CEOs had resigned, bringing with him experience as CEO of Patisserie Holdings plc, Tulip Ltd and Danwood Group Holdings Ltd. His predecessor, Nick Maddock, resigned following two profit warnings in three months and a hit of more than 20% of SIG Group’s share price. Despite the bid to restore the company’s financial situation with a fresh leader, its share price further dropped from 65.96p to 30.00p since Francis was appointed in February 2020. Nevertheless, Francis was later elected with at the on 30 June 2020.  

Francis is already on a base salary of £540,000 with a maximum annual bonus potential of 150% according to SIG Group’s . The Investment Association’s IVIS voting service ‘red flagged’ the payment, giving its highest level of warning for poor practice. Institutional Shareholder Services, Glass Lewis and PIRC all advised against the resolution. PIRC said that the payment ‘appears to be associated with his involvement in the capital raise, and his continued employment’. Glass Lewis stated it was ‘sceptical of any type of extra bonus that rewards individuals for actions that we view as intrinsic to an executive's duties’.

The board commented in its that it ‘welcomes the majority support for the one-off payment of £375,000 to the CEO of the Company outside the terms of the Directors' Remuneration Policy but acknowledges that a significant number of votes were cast opposing the resolution.’

For further stories on shareholder revolts see:  Price tag on remuneration reports cause for shareholder opposition and Shareholder opposition as pension Pott stands 1 % away from a ‘red top’.