The owner of Aston Martin is facing the embarrassing prospect of a revolt over boardroom pay within months of its £4.3bn flotation amid growing City unrest over the luxury car-maker’s performance.
Sky News can reveal that several investors in Aston Martin Lagonda Global Holdings plan to vote against the company’s pay policy at its AGM on June 25 because of the scale of chief executive Andy Palmer’s potential payouts.
The prospect of a backlash from major institutional investors has been fuelled by a recommendation from Institutional Shareholder Servies (ISS) – an influential proxy adviser – to oppose the car company’s future pay policy.
The vote on future policy is binding, although there is no possibility of the manufacturer of James Bond’s favourite cars losing the ballot because only 32% of the company’s share register is in public hands.
The remainder of the business is still owned by Investindustrial, an Italian private equity firm, and Investment Dar, a Kuwaiti sovereign fund.
Nevertheless, the idea that a sizeable proportion of its independent investor base plans to revolt over Mr Palmer’s pay will be acutely embarrassing to Penny Hughes, its chairman, and the rest of its star-studded line-up of independent directors.
Aston Martin’s shares have performed dismally since last October’s high-octane listing, which was arguably the most prominent City flotation for years.
The company has fallen in value by close to £2bn, or more than 40%, since its initial public offering (IPO), and reported a first-quarter loss last month which it blamed on higher costs.
Weakening sentiment towards one of the automotive industry’s most revered brands reflects wider fears about the health of the sector, with new car sales in the UK and China proving to be underwhelming in recent months.
Mr Palmer, whose base salary of £1.2m is also flagged as excessive by ISS, said the second half of its financial year should demonstrate an improved financial performance, and highlighted a 6% rise in first-quarter revenues as evidence that Aston Martin was capable of bucking the industry trend.
Earlier this week, he said the first of its new DBX SUV model will roll off the production line in the first half of next year as he seeks to rev up its shares.
In a report sent to investors, ISS said: “The main concern with the proposed [remuneration] policy is the overall quantum of variable pay on offer for the Group CEO at 500% of salary.
“This is considered well above the company’s current positioning and size, particularly when considering the relatively high salary level.”
Mr Palmer is already worth tens of millions of pounds on paper, thanks to his turnaround of Aston Martin’s performance prior to its IPO.
A source close to the company pointed out that Mr Palmer had made substantial financial sacrifices to join it from Nissan in 2014.
His base salary is fixed until at least 2022, and he has committed not to selling any of the shares received under this year’s LTIP awards until Aston Martin’s shares return to the £19 IPO price, the source added.
Imelda Walsh, chair of Aston Martin’s remuneration committee, said in a statement issued to Sky News that it had undertaken “detailed engagement with shareholders…both in terms of the development of the remuneration policy and on the performance targets to apply to our first award under the new long-term incentive plan”.
“Our approach is consistent with the remuneration policy outline and principal terms of employment set out in our IPO Prospectus.
“The committee has also given much consideration to current circumstances, in particular the fact that our current share price is significantly lower than at the time of the IPO, and has made changes to certain elements of our approach to remuneration for 2019 to reflect these.”
Another insider said Mr Palmer’s remuneration was “in line” with other bosses in the global automotive sector.
“The peer group is not really FTSE250 but global auto companies and luxury goods companies,” he added.