British American Tobacco – AGM 23 April 2020
Item 2: Remuneration report
BAT announced a 9.5% salary increase offered to the CEO. The new salary will correspond to 147% of the FTSE100 median. The current level of Jack Bowlesn'remuneration is already largely excessive (£10m). In the UK, investors and politicians demand coronavirus pay cuts. According to an analysis by the Financial Times, at least 36 companies have announced executive salary reductions, with a typical cut of 20 % of salary. Some go further by waving their bonuses. And in light of the recent COVID-19 breakout and economic uncertainty, ECGS considers that it is not the right moment to escalate the pay question.
Item 17: Share buybacks
British American Tobacco (BAT) has denied the shareholder right to approve dividends. ECGS considers the proposed dividend distribution unsustainable and irresponsible in the current situation. The payout is high, the dividend increase is not supported by the EPS growth. The proposed distribution equals 7.2% of the current capitalisation. At the same time, the group, already highly indebted, announced further bond issuance up to 53% of the dividends to pay. Given that these payments have been financed through increased borrowing, we do not believe it is prudent to authorise share buybacks at this time. ECGS has serious concerns about the potential impact of the Covid-19 on the group's balance sheet strength.
British American Tobacco is engaged in tobacco and nicotine products. This includes Co.'s Next Generation Products, comprising its vapour and tobacco heating products, and its oral tobacco and nicotine products such as moist snuff and snus. Co.'s U.S business (Reynolds American) brand portfolio which includes Newport, Camel and Pall Mall. These, and other brands including Doral, Misty and Capri, are manufactured in a variety of styles and marketed throughout the U.S. Co. has other international and local cigarette brands including Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, Benson & Hedges, John Player Gold Leaf, State Express 555 and Shuang Xi.
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