Imperial Brands drops CEO pay rise due to shareholder pressure
Imperial Brands' shareholders are believed to have blocked a pay increase for Alison Cooper, the tobacco company’s CEO. The firm announced on Thursday that it would not submit its new pay policy, which would have increased Cooper’s pay from £5.5m to £8.5m p.a., to its annual meeting in February, suggesting that it expected to lose such a vote. Proxy voting agency ISS had already recommended a vote against the policy. Last week, BlackRock, the world’s largest fund manager, which is among the top three investors in most FTSE 100 companies, said that it would be opposing excessive executive pay.

Shareholders appear to have blocked a pay rise for Alison Cooper, chief executive of Imperial Brands, in a move that may affect other FTSE 100 companies aiming to hike the bonuses of their bosses.

The maker of Gauloises and John Player cigarettes issued an unexpected announcement to the stock exchange on Thursday to say it would not put its new pay policy to a vote as originally planned at the annual meeting on 1 February.

The policy, which must be voted on every three years, would have had the effect of increasing Cooper’s pay from £5.5m to a potential £8.5m a year from increased bonus opportunities.

The move demonstrates that the company did not expect to win overwhelming support for the proposal from investors. The decision by ISS, the proxy voting agency which is influential with major US investors, to recommend a vote against the policy had signalled that a sizeable revolt was on the cards.

Imperial’s chairman, Mark Williamson, said investors had changed their minds about backing the plan. “We have been actively engaging with shareholders for some time and while we received considerable support, it is clear that views have changed over that time and that the right course of action now is for the board to withdraw the resolution,” he said.

“The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business and we will re-engage with shareholders to reach a consensus on this important issue.”

David Haines, who chairs the company’s remuneration committee, said the pay rise was needed – not just for Cooper but other executives – because it was “significantly below the average for companies of our size”.

Critics of high pay said the move was a warning to company bosses about pushing through pay rises - but urged investors to keep up the pressure.

Stefan Stern, director of the High Pay Centre, said: “This is the first sign that some institutions are going to be a bit tougher this year, so it looks like good news.

“But just as one swallow does not make a summer, one example of effective criticism does not make a ‘shareholder spring’. The question is whether asset managers will continue to engage critically in this way.”

During Theresa May’s campaign to become prime minister she highlighted pay inequality. The government has since published a consultation which appears to backtrack on installing workers on boards to rein in excessive bonuses.

Last week, Blackrock, the world’s biggest fund manager which recently recruited George Osborne as an adviser, signalled that it was taking a higher profile stance on executive pay. Its size means it is usually among the top three investors in FTSE 100 companies.

Blackrock wrote to the major companies on the stock market warning that it was on guard for companies justifying pay rises on the basis of comparisons with the pay of rivals.