Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
Smith & Nephew survived a major shareholder revolt over a potential $2.6 million pay rise for its chief executive, in the latest controversy over executive pay by competing UK-listed companies with international rivals well paid for talent.
43 percent of the shareholders participated in the general meeting of the company nay the medical device company’s proposals, which will see Texas-based Deepak Nath receive up to $11.8 million next year if all targets are met, a 28.9 percent increase over his maximum package current $9.2 million.
The result is the closest of a series of votes on chief executive pay in recent weeks across FTSE groups. The company said it will “continue to engage with shareholders and proxy advisors” about the plans and will update on future consultations in six months.
The maker of joint implants and surgical devices justified the pay increase by saying that low salaries had contributed to high CEO turnover. The company has seen four bosses in five years.
But Institutional Shareholder Services, a proxy advisor for investors, recommended last month that shareholders reject the plan, which he described as “excessive.” Another proxy adviser, Glass Lewis, had supported the plan despite “reservations.”
The medical device company is the latest FTSE company to resist a shareholder revolt over big rises in chief executive pay, after AstraZenecahe London Stock Exchange Group and Ocado faced dissatisfied voices with their plans to hand out lucrative packages to executives.
Companies have said investors need to raise pay levels to hire and retain executives, while competing in a global talent market.
Unusually, Smith & Nephew will not increase the pay of its UK-based finance director, underscoring the different pay packages between the US and the UK.
Speaking before the vote, Nath told the Financial Times that the pay package was in the “long-term interests of the company” but said he would “absolutely” remain with the company regardless of the outcome of the decision.
He added that he appreciated “the differences in society and norms on both sides of the pond,” referring to the different salary levels between the United States and the United Kingdom.
Before the vote, the president of the company Rupert Soames told the Financial Times that the pay changes took into account the company’s focus on the United States and were a “sensible and pragmatic way of handling an issue where London-listed companies need to be able to recruit talent from markets across the world and those markets have different practices.
Namal Nawanaa previous CEO, resigned from the company in 2019 after 18 months on the job because it was not meeting his salary demands.
Wednesday’s vote coincided with that of Smith & Nephew. results for the first quarter of 2024. The company’s sales grew 2.2 percent to $1.4 billion, missing analyst estimates, with the United States accounting for nearly half of total revenue. The shares closed virtually unchanged on Wednesday, trading at 980.8 pence.