Investors in Greencore, the sandwich-maker that supplies UK retailers including Marks & Spencer, narrowly failed on Thursday to block plans to pay out hundreds of thousands of pounds in executive bonuses, after outrage at the company’s failure to refund any of the near-£30m it received in government support during the pandemic.
At the firm’s annual general meeting, 46% of investors joined a rebellion against the Dublin-based company’s scheme to reward directors with bonus shares.
The firm, which also counts Sainsbury’s and the Co-op among its UK clients, said that despite only securing 54% of the vote, it would press ahead with the scheme.
Most companies that took government furlough funds and remained profitable have repaid the Treasury before offering staff and directors bonuses.
However, Greencore has joined a list of firms, including WH Smith, JD Sports and Homebase, that have hung on to money from one or more of the government pandemic rescue schemes.
The shareholder adviser firms Glass Lewis and ISS said investors should consider rejecting Greencore’s remuneration report. Both advisers have raised concerns over the “appropriateness” of the FTSE 250 firm’s bonus payments, given its reliance on cash from the government furlough scheme, which subsidised staff salaries with state funds during the Covid outbreak.
The company has defended its use of government funding, noting the severe drop in profits it suffered at the height of the pandemic, when lockdown orders hit sales of breakfast and lunchtime meals at most supermarkets.
In a statement it said: “The board engaged extensively with shareholders to discuss the approach to remuneration. The board will continue to engage with shareholders on remuneration and other governance matters in the coming months, with a particular focus on the concerns of those that did not support the resolution at this time.”
Greencore swung to a £10.8m loss in 2020, from a £56.4m profit a year earlier.
The company tapped the state furlough programme for £21.3m in 2020, and a further £8.7m in 2021. While none of that taxpayer-funded cash has been repaid, Greencore paid €343,000 (£286,000) in share-based bonuses to its chief financial officer, Emma Hynes, for 2021, bringing her total pay to €895,000 (£746,000).
The company also granted a £600,000 bonus to its chief executive, Patrick Coveney, but he will not receive his payout as he plans to leave the company to lead the travel caterer SSP by March.
Before the meeting, the company told investors that a better than expected boost to profits in 2021 and the “outstanding contribution of the management team” meant that the executive bonuses were “considered by the board to be appropriate”.
It stressed that the bonuses were only paid out in deferred shares, rather than cash. These will be distributed after five years, and it said it would conduct a review before doing so. “Greencore has consulted extensively with its shareholders on its remuneration policy, and is pleased with the level of support that it has received,” it said.
Greencore, which grew out of Ireland’s former state-owned sugar beet industry and has nine facilities in the UK, claims to be the largest sandwich-maker in the world.