Rolls-Royce Holdings – AGM 7 May 2020
Item 3: Remuneration report
During the year, Rolls Royce faced unprecedented challenges with its Trent 1000 engine resulting in an exceptional charge of £1.4bn. Its total cost is estimated at £2.4bn for 2017-2023 compared to the group's capitalisation of £6.5bn. Since 2018, net losses have pushed the Company's shareholder equity into negative territory (-£3.38bn). The credit agencies degraded its credit rating to a negative outlook. We have a serious question about the appropriateness to pay any bonus in light of the group's results. Despite the good cash generation, bonus main measure, we consider the bonus payout of 94% of salary or £0.9m exorbitant and completely disconnected to the groupns overall performance. The 2017 LTIP also vested at 53% offering a gain of £1.1m while TSR lost 62% in a year and 24% over the last three years.
Items 19 and 23: Dividend and share buy-back
The Covid-19 uncertainty has increased and the Board has decided not to make the final dividend payment to shareholders. ECGS considers that it is not the right moment to proceed to a new share buyback especially when the Company cancelled the dividend distribution and has negative shareholder equity.
Rolls Royce Holdings is an engineering company. Co. is organised into five businesses: civil aerospace, which develops, manufactures, markets and sells commercial aero engines and aftermarket services; defense aerospace, which develops, manufactures, markets and sells military aero engines and aftermarket services; power systems, which develops, manufactures, markets and sells reciprocating engines and power systems; marine, which is develops, manufactures, markets and sells marine-power propulsion systems and aftermarket services; and nuclear, which develops, manufactures, markets and sells nuclear systems for civil power generation and naval propulsion systems.
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