Diageo, the struggling owner of Guinness and Johnnie Walker whisky, is facing an investor backlash next month over nearly £8.5m in stock awards handed to the frontrunner to become its next chief executive.
Sky News has learnt that investors in Diageo are being urged to vote against its pay report at its annual meeting in early November because of disquiet over the lack of performance conditions attached to shares awarded to Nik Jhangiani.
Mr Jhangiani joined the company, which also owns Baileys and Smirnoff, as its finance chief just over a year ago.
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In July, he was elevated to become interim chief executive following Debra Crew’s ousting over the company’s lacklustre performance.
Glass Lewis, one of the leading proxy advisers which makes recommendations to institutional shareholders on voting decisions, has called on them to oppose Diageo’s pay report because of Mr Jhangiani’s recruitment awards.
“Given the significant quantum of the awards, approximately £8.48m, we believe that shareholders may reasonably have expected greater clarification as to the determination of the conditions associated with such awards,” Glass Lewis said.
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“In the absence of a cogent rationale as to the non-performance-based nature of the majority of awards, we believe this issue precludes shareholder support for this proposal at this time.”
The remuneration report vote is advisory only, and the result is not binding on Diageo.
In response to Glass Lewis’s recommendation, a Diageo spokesperson said: “The recruitment arrangement was predominantly made in shares and was to compensate Nik for what he forfeited from his previous employer upon joining Diageo.
“When determining the structure and value of a recruitment arrangement, the Remuneration Committee looks to ensure that any such compensation has a fair value, no higher than that of the awards forfeited.
“As an executive director, Nik is subject to a shareholding requirement both during his tenure and on a post-employment basis.”
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Mr Jhangiani is widely regarded as the most likely permanent successor to Ms Crew, with an appointment said to be possible as early as next month.
