Investors in The Restaurant Group, which owns the Wagamama chain, have been warned by a corporate governance research service that they need to be satisfied that executive bonuses are appropriate after government support during the Covid-19 pandemic.
The group, however, says directors voluntarily waived their bonuses in 2019, none were awarded in 2020 and they took pay cuts of up to 40 percent through 12 months of the health crisis.
The Institutional Voting Information Service (IVIS) raised its concerns when it approved the remuneration report of The Restaurant Group, which counts Wagamama, Frankie & Benny’s and Chiquito among its seven hospitality brands, collectively operating about 400 eateries around the UK.
Andy Hornby, chief executive of the group since August 2019, was paid £1.2 mn ($1.5 mn) in 2021, up from £518,000 in 2020, mainly thanks to a £578,000 annual bonus, his first in post, according to the group’s 2021 annual report. The group had not paid an annual bonus to its CEO since 2017.
The annual report says the group’s adjusted profit before tax was £16.6 mn on a pre-IFRS 16 basis, compared with a loss of £47.9 mn in 2020. The group will hold its annual meeting at its London head office on May 24.
The IVIS report on The Restaurant Group’s renumeration report notes: ‘Given the use of furlough scheme and other government support, suspension of dividend and capital raise during the year, shareholders will have to be satisfied that the bonus payouts for 2021 are commensurate with the experience of employees and other stakeholders'.
‘Mindful’ of pay factors
The Restaurant Group told IR Magazine the board is ‘mindful’ of a range of external and internal factors when considering its approach to remuneration and regularly consults its shareholders on these matters.
‘The business delivered a strong trading performance in 2021, following the reopening of its sites. [But] in light of the Covid-19 pandemic and the receipt of significant government support, the remuneration committee felt it appropriate to reduce executive directors’ bonuses by 40 percent. During the pandemic, 2019 bonuses were voluntarily waived by directors and no bonuses at all were awarded in 2020. In addition, directors waived between 20 percent [and] 40 percent of their salaries through the pandemic for 12 months from March 2020.’
The Restaurant Group joins Coca-Cola, Accenture, Amazon, Twitter, fashion retailer Next, bakery chain Greggs and online grocer Ocado among other companies in having its executive compensation come under increasing scrutiny by investors at annual meetings after the impacts of the pandemic on dividends and share prices.
Almost half of IR professionals surveyed by IR Magazine say they have seen increased investor interest in executive compensation over the past five years, while 44 percent of investors say they have spoken more about the issues with companies in that time. The new IR Magazine Executive Compensation report finds more than half of investors polled expect board directors to discuss executive compensation packages with them.