• Paul Hunter

Analysis

Supermarket Morrisons has suffered a huge shareholder revolt over plans to award bumper pay deals to its bosses.

RemCo applied discretion to effectively strip out the impact on operating profitability from the pandemic and reward a very good 'under the circumstances' performance by the Morrisons Directors. Shareholders were not however convinced. Incentive plans must always appropriately balance three competing objectives:


1. Risk sharing - ensure that business risk is shared appropriately between managers and shareholders

2. Motivation - ensure that the bonus plan creates focus and enhanced levels of motivation and effort

3. Reward - increased levels of total reward for a job well done (to secure retention and future performance)


In this case, shareholders have clearly voted for more of number 1 and less of number 2 and 3. It might just be the right call, at least for the most senior Executive Directors. Remuneration committees would do well to take heed of this as we move forward. #executivepay#remuneration#executivecompensation