³ÉÈËÓ°Òô

Remuneration continues to be a point of contention this AGM season with 34.9% of Domino’s Pizza Group shareholders voting against its remuneration report at the , held on 22 April.

Addressing the significant no vote, Domino’s highlighted that the board had engaged with major shareholders prior to the AGM and understood that the principle points of concern were in relation to the annual fee of the chair and the base salary of the CEO. The board stated it would continue to engage with shareholders and will publish an update on this within six months in accordance with the UK Corporate Governance Code.

The significant no votes follow on from the resignation of the previous chair and CEO in 2020. In its annual report, the remuneration committee highlighted that ‘competition for high calibre talent with the specific skillset relevant to our business was fierce’. As such, the committee felt it was necessary to offer a compensation that was higher than its previous packages, in order to attract appropriate talent.  This included a base salary of £750,000 for new CEO, Dominic Paul – representing a 41% increase on former CEO David Wild’s base salary.

High remuneration packages have been particularly controversial in recent years, as investors and governing bodies alike look to reduce the widening gap between executive pay and the wider workforce and ensure awards are linked to performance. The pandemic has only emphasised the scrutiny in this area, with the Investment Association (IA) publishing statements in April and November 2020, clarifying that it is important that remuneration committees are mindful of the wider workforce when setting policies at this time. This includes ensuring that executive compensation is reflective of other measures that may have been taken to combat the impacts of the pandemic, such as seeking government support, furloughing employees and cancelling dividend payments.  The IA states:

‘The impact of COVID-19 will be different for each and every company. Whilst there are minimum expectations for every company, shareholders expect Remuneration Committees to take account of their individual circumstances particularly considering the impact on their stakeholders. Committees will have to adopt an approach that is appropriate to the company and the specific impacts of COVID-19 on the business.’

Domino’s remuneration committee addressed this within its annual report, stating, in relation to individual bonuses, that none of its employees were furloughed, and that the group did not seek financial support from the government, alongside this, a deferred dividend for 2019 was paid in September 2020.

Market Tracker noted in its 2020 Voting Results Trend Report, that executive pay was the most hotly contested resolution, accounting for a third of failed resolutions and 41% of resolutions carrying significant no votes.  The 2021 AGM season has already seen a significant amount of noise in this area, with two companies reporting significant no votes against their remuneration reports this month, alongside expected opposition at Glencore’s AGM on 29 April 2021 (see: Shareholder advisory groups take a dig at Glencore’s remuneration package), and AstraZeneca’s AGM on 11 May 2021, following shareholder advisory groups recommending shareholders vote against the remuneration packages of both company’s CEOs.

Market Tracker will continue to monitor these trends as they develop.