Leading investor advisory firms have criticised Glanbia’s plan to award its CFO, Mark Garvey, a share-based bonus anticipated to be worth around €750,000 to ensure he remains with the company for a minimum of two years. Both Institutional Shareholder Services (ISS) and Glass Lewis, globally significant firms that offer guidance on corporate governance matters to investors, have suggested shareholders to dissent on Glanbia’s remuneration policy at the forthcoming annual general meeting (agm) on 1st May.
Although the votes cast on remuneration matters are usually non-binding, it can lead to embarrassment for a company if large groups of shareholders oppose a remuneration policy or report. This commonly results in the company engaging with investors to resolve their concerns.
In its yearly report, Glanbia mentioned its intention to award Mr Garvey, its CFO for over ten years, approximately 42,545 shares to ensure his commitment to supporting the group’s new CEO Hugh McGuire. McGuire took the role in January after the retirement of Siobhán Talbot, Glanbia’s long-serving head. The assignment of shares being planned is to reflect Mr Garvey’s basic annual salary of €633,000 last year, taking into account the standard share price of €15.47 in December for the company. However, with Glanbia’s shares now valued at €17.61, the shares are expected to be nearly €750,000 in worth.
Last year, Mr Garvey’s total remuneration added up to €3.57 million, with the majority constituting cash and share bonuses. Ms Talbot’s remuneration was €7.95 million. ISS voiced concerns in a report regarding the nature of such one-off retention awards and the absence of performance provisions, stating they diverged from accepted market practices, hence not meriting shareholder endorsement. Glass Lewis also questioned the suitability of such a large bonus without performance conditions, thus advising shareholders to reject this proposal.
“The necessity of retaining our principal financial officer to drive our growth strategy was collectively recognised to be crucial for our stakeholders,” conveyed a representative for Glanbia. “The remuneration package for maintaining our CFO’s position is an extraordinary, single instance grant, shared out in equity and its value is interconnected with the investor experience across both the assignment and retention periods [an entirety of three years].”
The health and nutrition organisation, stationed in Kilkenny, announced in February that its post-tax income rocketed by 20 per cent the preceding year to $298.1 million (€280 million) in 2023, aided by the “protein super trend.”
Glanbia stands amongst the global leaders in manufacturing protein supplements for fitness enthusiasts. The firm’s predominant Optimum Nutrition label grossed a revenue of $1.1 billion in the former year, as demonstrated by recent reports.
Last year, the Glanbia Performance Nutrition unit yielded $1.8 billion in revenue, supported by high-demand brands Optimum Nutrition and Isopure. Meanwhile, its nutritional solutions sector provided slightly more than $1 billion.
On the flip side, its US cheese sector experienced a downturn in sales revenues, dropping by 13.9 per cent to $2.6 billion, primarily due to a decrease in rates.
The past 12 months have reported a positive trajectory in the company’s shares, upsurging by 29 per cent.