Greencore shares rise despite CEO pay dissent

Greencore shares jumped by as much as 8% yesterday despite 40% of shareholders voting against a rise in bonus entitlements for the group’s top two executives.

A resolution to double chief executive Patrick Coveney’s potential performance-based share bonus — from 100% of his basic salary to 200% — and boost chief financial officer Eoin Tonge’s from 100% to 150% of salary was passed with the support of almost 60% of shareholders at the Dublin-based convenience food group’s AGM in Dublin yesterday.

Shareholder advisory firm Institutional Shareholder Services had last week urged investors to reject the resolution.

Greencore engaged with institutional shareholders on the matter last August, but has attributed the relatively high level of opposition to a change in its shareholder register since completing its near €700m takeover of US company Peacock Foods.

Mr Coveney was paid a salary of £610,000 (€710,000) last year, with additional benefits boosting his total remuneration package to £2.52m. 

Greencore will have to deliver earnings per share growth of between 5% and 15% for the next three years in order for the bonus entitlements to become a reality and the two directors won’t be able to cash in on the bonuses for five years; two more than under the previous arrangements. 

The latter aspect is understood to have been a factor for the 60% of investors who approved the motion.

Chairman Gary Kennedy told shareholders the share bonus plan still has to be earned, but brings Greencore in line with its Ftse-quoted peers and reflects the group’s growth strategy. 

He said it is also a way of retaining an “exceptional” individual in Mr Coveney.

In the coming weeks, the Greencore board will meet with newer institutional investors and said it hopes to see a higher level of acceptance for remuneration levels at next year’s AGM.

Greencore’s shares were up by over 8% in London yesterday, before paring back and closing just under 7% ahead.

In a first-quarter trading update, covering the three months to the end of December, Greencore said it is confident of meeting market expectations regarding its earnings for the 12 months to the end of next September.

The quarter showed a 17% annualised increase in group revenues to £417m. Revenues in the core convenience foods arm jumped 16.4% to £402m, while the US was up by 31.2% even without early contribution from Peacock Foods.

Speaking after the AGM, Mr Coveney said Greencore will be largely unscathed by Brexit, but will see prices for its products increase as the cost of raw materials such as beef and dairy imported to the UK rise as well.

The main concern, he said, will be what happens to Britain’s immigration laws. While he foresees no job losses, Mr Coveney said the company will look to put more of its UK staff on permanent contracts in a bid to retain employees.

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