MELROSE INDUSTRIES PLC - EGM 21 January 2021
The Board seeks shareholder approval of the revised 2020 LTIP and amended Remuneration policy. Overall, the 2020 plan remains consistent with previous ones. Thought, Melrose proposes three changes to adjust the LTI for the impact of Covid-19.
The Board proposes to set a starting price, from which the created value will be assessed, at 146.85p. The plan will vest if the shareholder return is above 5% p.a., which gives us an effective start price of 170p per share. This effective start price is already 5.3% below the current share price meaning that there is already a gain for executives. Because of the low starting price, we consider that the proposed performance condition is not challenging.
In total, the CEO’s grant under the 2020 plan may reach £56m for a 5-year plan without taking into account accrued dividends, which we consider excessive even for a multi-year plan. The 2017 plan lapsed in 2020, however, we note that the CEO Simon Peckham gained £42.76m in 2017. Over the last ten years, the group CEO's average remuneration under the UK total single figure was £3.85m, which is at the 2019 median remuneration in FTSE100.
The plan is not limited in terms of base salary. We appreciate that the LTI award will now be capped, however, the proposed annual cap is excessive and we do not understand why there is an opportunity to recuperate excess shares during additional two years after the performance period without any additional performance condition.
Melrose Industries consists of four divisions: the Air Management division, which includes the Heating, Ventilation & Air Conditioning business, which manufactures and sells split-system and packaged air conditioners and Air Quality & Home Solutions businesses, which is a manufacturer of ventilation products; the Security & Smart Technology division, comprising the Security & Control, Core Brands and Access Systems businesses; the Ergonomics division, which includes the Ergotron business, a manufacturer and distributor of products designed with ergonomic features; and the Energy division, which includes the Brush businesses that supply energy industrial products to the global market.
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