London - Two investor advisory groups on Wednesday recommended that shareholders in Old Mutual should vote in favour of pay proposals linked to the financial services group's plans to break itself up into four businesses.
The Anglo-South African company is proposing to pay chief executive Bruce Hemphill a maximum break-up bonus of 1 000 percent of his 2016 base salary of 900 000 pounds ($1.28 million).
Institutional Shareholder Services said: “The quantum of the CEO's award ... raises particular concerns.” But ISS also said the remuneration policy was “well-aligned to the company's strategic plans, which it expects will deliver significant value to shareholders.”
Glass Lewis also recommended voting for the new pay policy. But it advised shareholders to reject Old Mutual's remuneration report for last year, citing concern over cash payments made to Hemphill when he was hired in November 2015.
Another investor advisory firm Pensions & Investment Research Consultants (PIRC) recommended voting against both the break-up pay proposals and the 2015 remuneration report.
PIRC said it considered total awards under the break-up incentive scheme, as well as payments made last year to Hemphill and outgoing chief executive Julian Roberts, to be “excessive”.
Read also: In-depth look at the Old Mutual split
Shareholders will vote on the break-up remuneration policy at an extraordinary general meeting following the company's annual general meeting on June 28.
Old Mutual, which started life in 1845 as a life insurer in Cape Town, has decided to break itself up because regulatory changes in Europe and South Africa have made the company more complex to run in its current form.
REUTERS