Pearson has faced a shareholder revolt over executive pay as investors in the London-listed education group voiced their unhappiness at the prospect of higher payouts in the future.
More than 46% of votes cast in a binding ballot at the company’s annual general meeting on Friday were against a new compensation policy, the latest in a string of protests after chief executive Andy Bird took home 8 .5 million dollars last year.
Uprising comes despite praise for Bird, who is credited with helping transform Pearson. It also highlights a conundrum about executive recruitment for UK listed companies, such as some move to the United States.
The new compensation policy, which defines Pearson’s compensation framework for three years, recommends increasing the maximum annual bonus level from 200 to 300 percent of salary. He also proposed raising the maximum level of long-term incentives from 350 to 450 percent.
In its annual report the company said it represents “a remuneration framework aligned to the UK market. . . but with greater levels of opportunity” to address the challenges of US executive recruiting.
Pearson on Friday said his board was committed to a compensation structure that would allow him to be “competitive in the global talent marketplace” by aligning pay and performance.
Investment advisers Glass Lewis and ISS opposed the policy. Glass Lewis said that comparing Bird’s pay to US companies “has resulted in a total chief executive pay opportunity that significantly exceeds that of similarly sized UK listed companies.”
Hargreaves Lansdown analyst Susannah Streeter said there was “growing unhappiness” with executive pay at Pearson, particularly given the cost-of-living crisis and the “large disparity” between Bird’s pay and that. of ordinary staff.
Salaries for Pearson employees in the firm’s 25th and 75th percentiles were £31,998 and £58,525 respectively, according to the firm’s annual report.
Bird’s total salary was $8.5 million last year, including $6.6 million performance-related. However, investor displeasure over this fell short of a full outcry at the AGM with only 13% of votes cast against the pay report, referring to existing pay, compared to 37% against in 2021.
While most of Pearson’s revenues are in North America, the group remains listed in London. The company hasn’t ruled out a move, but said in March it had “no plans” to move.
One of Pearson’s top 10 shareholders said it was “moving in the right direction” under Bird and highlighted the challenges with UK recruitment. “We have this debate about the disappearance of the London stock market, but we have a distorted view about pay,” they said. “It’s a tightrope, getting talent.”
From nominated in 2020Bird has rebranded textbook publisher Pearson as a permanent provider of education and training services and the group was among the FTSE’s best-performing stocks last year.
A trading update on Friday showed the company’s underlying sales growth rose 6% in the first quarter, beating expectations.
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