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May 25, 2023

Wagamama owners fend off shareholders as CEO pay rise gets green light

The Restaurant Group chief executive awarded maximum remuneration

The Restaurant Group (TRG) narrowly escaped a shareholder revolt at its AGM on Tuesday as more investors call for a company-wide shake-up.

During the AGM, held in London, shareholders voted 45 percent against the remuneration report that sees CEO Andy Hornby awarded a maximum of £2.7 mn ($3.3 mn) for the year, despite company losses.

As part of the company’s restricted share plan, Hornby is eligible for a maximum annual bonus of 150 percent for the year on top of his base salary, which increased by 2.5 percent to £674,450. But shareholders made their feelings about the salary increases clear at the meeting, with the remuneration package seeing its highest proportion of votes against since 2020.

Investors have been unhappy with the progress the Wagamama owners have made over the past few years, which includes succumbing to a statutory loss of £86.8 mn in 2022 and a loss of £35.2 mn in 2021.

‘Little hope for the future’

In February, Oasis Management Company, which owns a 12.3 percent stake in TRG, issued a letter to the restauranteur imploring the board to urgently discuss with its shareholders the necessity for ‘meaningful, immediate and near-term governance change’. The private funds manager also stated that company announcements and market consensus issued by TRG offer ‘little hope for the future’ and are unattractive to new investor capital.

In response, TRG said that while Oasis said it had been engaging with TRG for several years, ‘our chairman met Oasis face to face for the first time in December 2022. At this meeting, Oasis requested a seat on the TRG board and a strategic review to be conducted by an independent bank. 

‘This request was made without Oasis giving indication of strategic ideas that should be examined by the board. The board therefore decided it would not be in the interest of our other shareholders to grant Oasis a board seat.’

‘Failing to deliver’

Ahead of the AGM, Oasis urged shareholders to vote against the remuneration policy, saying Hornby’s disproportionate pay ‘has failed to promote value creation’ as shares have fallen by 73 percent since he became CEO.

The proposed continuation of the restricted share plan is ‘even more unpalatable in the case of the TRG CEO, who already receives a highly generous base salary that is disproportionate compared with the size of TRG, as well as relative to the wider workforce,’ Oasis explained.

‘We urge all shareholders to express their views directly and exercise their votes at the upcoming AGM to deliver a clear message that the board’s existing approach to remuneration is failing to deliver for shareholders and should not continue.’

Commenting on the results of the AGM, TRG explained that while it was pleased with the outcome of the meeting, it did notice the level of engagement over the remuneration report.

‘Nonetheless, our largest shareholder – Columbia Threadneedle – and our third-largest shareholder, Royal London, with a combined holding of around 23 percent, have confirmed their continuing support for the policy.’