RPMI Railpen criticises Reckitt Benckiser over pay

Railpen Investments criticises Reckitt Benckiser over pay and board structure

London, 5 May, 2016 – Railpen Investments has raised “significant concerns” about the quality of board governance at Reckitt Benckiser, and voted against resolutions on remuneration and on the re-election of some board members at the company’s Annual General Meeting today.

The £22 billion rail industry fund voted against Reckitt Benckiser’s new remuneration policy because it fails to address concerns that long term incentive awards become payable after only three years.

Railpen, which is a long term shareholder in the company, also voted against the re-election of the company’s Chairman, Adrian Bellamy, and members of its Remuneration Committee, including its Chair, Judith Sprieser, describing her performance in the role as “underwhelming”.

In a statement to Mr Bellamy at today’s AGM, Railpen’s Head of Sustainable Ownership, Deborah Gilshan, said:

“The Board has undergone a lot of change in recent years, and we recognise that board refreshment is not without its challenges. However, certain non-executive directors who were only appointed in 2014 are not seeking re-election at this annual meeting, for which no specific explanation is provided.

“In contrast Ms Sprieser and Mr Hydon remain on the board, despite each serving 12 years and you remain as Board Chair, despite serving 16 years. Ms Sprieser and Mr Hydon are Chairs of the Remuneration and Audit Committees respectively and should be demonstrably independent, in line with the principles of the UK Corporate Governance Code.

“Previous annual reports have indicated that Ms Sprieser and Mr Hydon would be stepping down from their roles and now, at the 2016 annual meeting, they are seeking re-election again. It is unclear how long they will remain as non-executive directors.

“We are not opposed to longer serving directors per se; it is also about their effectiveness. In Ms Sprieser’s case, we have been underwhelmed by her stewardship and oversight on remuneration.”

Ms Gilshan also questioned the logic of the Remuneration Committee in determining the appropriate level of pay to motivate and incentivise the CEO, telling Mr Bellamy:

“Having raised the substance of these issues in the past with you, as Chairman, we are now conveying them to the Board as a whole.

“Will the Board commit to addressing these material risks to the strong underlying performance of the company?”