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Investors oppose pay packages

Weir suffers pay blow in ‘shareholder spring’

Keith CochraneShareholder rebellions picked up yesterday with revolts against boardroom pay for engineering firm Weir Group and Shire, the pharmaceuticals company.

Weir Group’s directors’ planned remuneration policy for directors cannot go ahead after being opposed by 72.4% of voting shareholders because the bulk of the proposed award for chief executive Keith Cochrane was not linked to performance.

Dr Hans-Christoph Hirt, co-head of shareholder advisory firm Hermes EOS said: “To focus on creating value over the long term, we believe that the company should have performance targets and apply the test of common sense if these prove to be unrealistic due to unanticipated market conditions.”

Shire also suffered a revolt by shareholders, with 49.5% voting against the directors’ remuneration report.

Opposition to big pay packets to executives at the firms followed similar outrage at oil giant BP and the energy firm Centrica.

AstraZeneca is among the next targets for shareholder advisory firm Pirc which has urged investors to oppose an £8.4m pay award for Pascal Soriot, the drugs giant’s chief executive.

Royal London Asset Manage­ment said yesterday that it would be voting down remuneration reports at Standard Chartered’s and Reckitt Benckiser’s AGMs next week.

The current wave of shareholder rebellions are a reminder of similar action in 2012, when companies such as Aviva, Trinity Mirror and WPP were subject to shareholder action against pay.

Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said: “This year has seen a ‘spring of discontent’ for a number of major British companies, with shareholders demonstrating their unhappiness at the remuneration packages awarded to top executives last year at a time when company performance was lacklustre at best.”

Weir Group has said it expects first-half profits to be slightly ahead of market expectations, despite being the affects of a 47% fall in orders for its oil and gas division. Original equipment orders were down 40% and aftermarket orders were 49% lower.

In an interim management statement Weir said: “Oil and gas markets have continued to decline despite the limited improvement in oil prices since February.

“In North America, the division’s biggest end market, US land rig count has declined by nearly 20% in the past two months and market expectations are for a 46% reduction in wells drilled in 2016.

“This further reduced demand for pressure pumping and pressure control equipment, with approximately 70% of the North American frack fleet now idle.

“As expected, international markets have also become increasingly challenging with double-digit activity reductions as the rig count outside North America fell by 10% to close to 2009 lows.”

Orders in Weir’s flow control division, orders in the first quarter were down by 20% on a year ago.

It said economic uncertainty had led to “continued customer caution and project delays across the division’s end markets”. Revenues in the minerals division are stable.

Mr Cochrane said: “The group has maintained its focus on strong cash generation, aggressive cost reduction and developing the innovative solutions which have made Weir a global leader.

“This comes against the backdrop of ongoing challenges across our end markets. Mining customers continue to prioritise preserving cash, although there was a slight pick-up in orders through the quarter and minerals divisional revenues on a like-for-like basis were flat year-on-year.

“Trading conditions in oil and gas markets reflected further reductions in activity levels in all regions despite the limited improvement in oil prices in 2016.

“The group remains focused on cost reduction measures which have helped to deliver first-quarter profits slightly ahead of our expectations.

“As a result, we expect first-half profits to be slightly ahead of market expectations.

“Our full-year expectations remain unchanged, reflecting the slower recovery now anticipated in oil and gas markets.”

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