iNVEZZ.com, Monday, September 15: The world’s largest distiller, Diageo (LON:DGE), has come under fire over its remuneration policies and may face an investor revolt at its Annual General Meeting (AGM) later this week, the Sunday Times yesterday reported.
The total pay packages of Diageo CEO Ivan Menezes, chief financial officer Deirdre Mahlan, and former CEO Paul Walsh totalled £18 million over the year to July. This figure included bonuses, benefits and other performance-related payouts. While Menezes’s basic salary was £933,000, his total pay was £7.8 million. Walsh received £6.4 million, despite Menezes taking over in July last year.
Although all directors received significantly lower payouts than they did a year earlier, observers predict a sizeable protest vote at Diageo’s AGM on Thursday.
The maker of Johnnie Walker whisky, Smirnoff vodka and Guinness stout said it was “satisfied that the levels of reward are appropriately positioned against those of competitor companies”. However, according to corporate governance groups and institutional shareholders, its directors’ bonuses are excessive in comparison with their base salaries and Diageo should “clean up its act”.
Shareholder advisory group Pirc has slapped a ‘red top’ rating on Diageo’s remuneration policies. Robert Talbut, chief investment officer at Royal London Asset Management, a shareholder, noted that the company’s pay policy has been “an area of growing concern for some time”.
Industry peer’s rise pushes Diageo higher
Diageo’s shares have been in demand today as investor sentiment received a boost by a jump in the share price of beverages peer SABMiller (LON:SAB).
Dutch brewer Heineken yesterday confirmed that SABMiller had approached its board with a takeover offer. However, Heineken said it had consulted with its majority shareholder and decided that the proposal was ‘non-actionable’ (SABMiller share price: Heineken rejects takeover bid).
The news together with rumours of a bid for SABMiller by Anheuser-Busch InBev pushed the company’s share price over 12 percent higher to 3,826.00p intraday. The surge underpinned the sector and Diageo traded 2.59 percent higher at 1,858.00p as of 12:44 BST.
Of the nine analysts projecting 12 month price targets for the FTSE 100-listed company for the Financial Times, the median target is 2,000.00p, with a high estimate of 2.400.00p and a low of 1,500.00p.
According to the FT, as of 12 September 2014 the consensus forecast amongst 48 polled investment analysts covering Diageo has it that investors should hold their position in the company.
As of 13:30 BST, buy Diageo shares at 1,857.00p.
As of 13:30 BST, sell Diageo shares at 1,856.50p.
As of 13:31 BST, buy SABMiller shares at 3,816.00p.
As of 13:31 BST, sell SABMiller shares at 3,814.00p.