Imperial Brands - 03 February 2021
Item 2: Remuneration report
Chief Executive Alison Cooper and Chief Development Officer Matthew Phillips left the Company on 1 February 2020 with the base salary and pension benefits paid during their notice period. Alison Cooper and Matthew Phillips did not receive any bonus for FY19/20 and all unvested LTIP awards have now lapsed and all deferred bonus awards have now been released.
The new CEO, Stefan Bomhard, was appointed on 1 July 2020. His base salary is 13% higher than that of his predecessor and took account of his experience and credentials according to the group. This salary corresponds to 145% of FTSE100 median, 127% of Personal and Household Goods sector median and 147% of UK companies in the MSCI Europe index. It is in the upper quartile of FTSE100 salaries while the group is 36th FTSE100 capitalisation so far. In addition, he benefited from a recruitment award of £ 2,276,583.
Item 23: Purchase of own shares
Adjusted EPS is used to assess 20% of the executive bonuses and 40% of LTI, which is below our limit of 50% for raising concerns. However, the CEO has a high variable remuneration potential (bonus capped at 200% of base salary and LTI at 350% of base salary). So, in terms of salary weight, the EPS payout may represent 180%. We also note that over the last four years, Imperial Brands cancelled 1.1% of its shares. Imperial Brands has a robust ability to generate cash flows but a high debt burden creates a risk for comfortable financing of its dividends and share buybacks. We do not consider sustainable to support any share buyback while a company proceeds to disposals to reduce its indebtedness.
Imperial Brands is comprised of two distinct businesses: Tobacco and Logistics. The Tobacco business comprises the manufacture, marketing and sale of tobacco and tobacco-related products, including sales to (but not by) the Logistics business. The Logistics business comprises the distribution of tobacco products for tobacco product manufacturers, including Co., as well as a range of non-tobacco products and services.
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