Diageo faces shareholder protests over executive bonuses at AGM

By Richard Siddle

Published: 16 September, 2014

Diageo chiefs are bracing themselves for a tough ride at this Thursday's annual company meeting over a row with some investors over the levels of boardroom pay.

Some shareholders and corporate governance groups have publicly criticised the drinks group for what they believe are excessive bonuses for board directors compared to the rest of the company's salary base. The investors have called for Diageo to "clean up its act," according to media reports including the Sunday Times.

The paper claims that Pirc, the shareholder advisory group, has given Diageo a "red top" rating for the company's pay strategy. It quotes Robert Talbut, chief investment officer at shareholder, Royal London Asset Management, as saying the company's pay policy has been "an area of growing concern for some time".

Directly in the firing line is chief executive Ivan Menezes who took over from Paul Walsh last summer. Shareholders are keen to question a remuneration system that gives Menezes a basic salary of £933,000 a year but which reached £7.8 million with bonuses. Walsh is believed to have received £6.4m in the year to July despite Menezes being at the helm.

Diageo has pointed out that all its directors have received significantly lower bonuses than in the previous year. It told the Sunday Times it was "satisfied that the levels of reward are appropriately positioned against those of competitor companies".

The company is, however, bracing itself for what could be a large protest vote at its annual meeting on Thursday.

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