The total pay packet of Reckitt Benckiser CEO Rakesh Kapoor rose by almost two-thirds last year to £11.2m less than a year after investors chastised RB’s pay policies at its 2014 AGM.
Kapoor’s total remuneration rose from £6.8m in 2013 to £11.2m last year primarily as a result of vesting share options granted in 2011.
The options under RB’s long term incentive scheme were recorded in RB’s annual report as being worth £7.4m in 2014 (up from awards worth £2.2m in 2013) and reflects the share price growth since their award. RB shares are up by 84% since the start of 2012 and are almost 20% up over the past year.
Kapoor’s annual bonus was down 25% to £2.68m from £3.56m in the prior year as exchange rate volatility hampered earnings growth last year – a key metric for the bonus award.
His base pay was up 4% to £865k and will rise another 3% to £891k for the 2015 financial year.
At RB’s 2014 AGM last May, 43% of shareholders refused to back the FTSE 100 firm’s remuneration report, while 31% of investors actively voted against the proposals.
The protest was thought to be primarily related to a lack of clarity over bonus payments, with RB promising to reflect these concerns in its 2015 annual report.
The annual report states that there were “no significant changes made to the remuneration structure during the year”, but it has “enhanced our disclosure of the annual bonus achievement” in the report.
The reduced 2014 bonus payments were based on net revenue growth and net income growth and resulted in a bonus of 2.58% of target, compared to a maximum of 3.57% of target.
Additionally, RB said that “the alignment between pay and performance was strengthened” last year for its long-term incentive plan which was responsible for Kapoor’s increased overall pay.
The company put in place increased performance requirements for maximum vesting and a reduction in the proportion vesting for threshold performance. Also investors will vote to introducing “malus and clawback provisions” at its 2015 AGM.
Judy Sprieser, chair of the remuneration committee, commented: “In drafting this Report we have taken feedback from shareholders into account and enhanced the level of disclosure, particularly in respect of the annual bonus.”
“I hope that you find this a clear and comprehensive report that demonstrates the strong alignment between pay and performance at RB.”
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