Stagecoach has come under fire for making it easier for bosses to be paid bonuses after it was stripped of the East Coast rail franchise by the Government.
Influential shareholder advisory group Glass Lewis is urging investors to vote against chief executive Martin Griffiths’ pay plan at the train and bus operator’s annual meeting on Friday.
In a report sent to investors, seen by The Mail on Sunday, Glass Lewis lambasts the firm for failing to explain why it lowered the profit targets for Griffiths to get a long-term performance bonus of up to £1 million.
Stagecoach has lost two major rail franchises since the previous target was set in June 2016.
The company came under fire earlier this year after Transport Secretary Chris Grayling took away the East Coast mainline franchise. The line from London to Edinburgh was supposed to have been operated from 2015 to 2023 by the Virgin Trains East Coast franchise – which is 90 per cent owned by Stagecoach and 10 per cent by Richard Branson’s Virgin.
But Grayling said the firms ‘got their bid wrong’ and overestimated how profitable it would be.
Last year, Stagecoach also lost its South West Trains franchise to a consortium including FirstGroup. It ran the service since its privatisation in 1996.
Griffiths agreed with his board that he should receive no bonus for the 2017-18 financial year, in part because of the East Coast fiasco. His total pay for the year was £987,000, but moving the goalposts on his bonus targets will make it easier for him to get one in future.
Under new rules, Griffiths and finance boss Ross Patterson need to pull in earnings of 24.4p to 25.7p per share to get bonuses, down from between 28.9p and 31.9p.
Glass Lewis says it ‘firmly questions’ the lack of an explanation to shareholders on why the target has been cut.
A Stagecoach spokesman said its pay policy was backed by 95 per cent of investors at last year’s annual meeting and noted that another shareholder advisory group, ISS, is recommending that investors back the board.
‘Challenging long-term incentive payment targets are also set every year, taking into account the nature and scale of the business, internal forecasts and market consensus,’ the spokesman added.
‘It is only proper that these targets will change from year to year.’
Source: This is Money