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Property Bosses Come Under Fire Over Pay Packets

Hammerson's David Atkins

Hammerson and Segro have drawn the ire of shareholders over the amount their top executives are paid.

At an annual general meeting last week, 49% of Segro shareholders voted against the company’s remuneration report, after shareholder advisory firms raised concerns about the firm’s plan to raise Chief Executive David Sleath’s base pay by £100K, to about £730K.

Normally a vote against pay of more than about 10% is seen as a sign of major shareholder displeasure.

Sleath’s pay rise represents an increase of about 8.5%. In its annual report Segro said it had planned to raise the chief executive’s salary by only 3.5% in 2019, in line with the general workforce, but felt that it needed to give him a bigger bump so that when Sleath decides to leave, the salary is more attractive to potential future candidates.

When bonuses based on share performance and pension contributions are taken into account, Sleath was paid £3.6M last year.

“While Segro has delivered market leading shareholder returns, and become an established constituent of the FTSE 100, the chief executive’s fixed pay and total pay opportunity will remain below mid-market levels,” the company said in a statement.

Hammerson gets to run the gauntlet of shareholder displeasure at its annual general meeting next week. One of the two main shareholder advisory firms, ISS, has advised shareholders to vote against the company’s remuneration report, according to Sky News. The other big advisor, Glass Lewis, said shareholders should vote in favour.

ISS warned that Hammerson's board did not recognise its weak share price when allocating share-based awards to Chief Executive David Atkins and senior colleagues. It also said that too many shares vested (became payable) in 2018 and that departing directors had received large bonuses.

While Segro can point to strong share price performance that has outperformed its peers and made it the largest listed UK property company by market capitalisation, Hammerson has had a tough year, and its share have fallen 38% to 330p.

In the past year Hammerson has pulled out of a deal to buy rival shopping centre REIT Intu, and rejected a 635p-a-share offer from French company Klépierre, saying it undervalued the company.

In 2018, Atkins was paid £1.15M, split between a base salary of £639K, awards of shares under long-term incentive plans of £307K and pension contributions of £192K. He did not receive an annual bonus. He received £595K in 2017.

In March, industrial investor Hansteen altered its long-term incentive plan after criticism from shareholders. The plan meant that because the company performed better than expected, the two founders, Ian Watson and Morgan Jones, received about £26M combined in 2018.

Last year, in a report about which chief executives deserved their salaries, Green Street said Hansteen’s remuneration plan was “off-the-chart high and difficult to justify”.