Pendragon, one of Britain’s biggest car dealers, is facing a massive shareholder backlash after paying its chief executive a six-figure bonus despite axing 1,800 jobs and using millions of pounds of taxpayers’ money to furlough staff.
Sky News has learnt that both the company and several of its directors risk being defeated over boardroom pay at next week’s annual general meeting.
Sources said that Mike Wright, the non-executive director who chairs the remuneration committee, was at particular risk of being voted off the board.
Shareholder anger has been exacerbated by Pendragon’s decision last July to slash about a quarter of its workforce while taking government funds to steer it through the pandemic.
Bill Berman, the chief executive and interim chairman, is also facing a big vote against his re-election after being awarded a deferred bonus worth £413,000.
A source close to Pendragon insisted that the company had “acted swiftly and decisively to protect its people”, and said its performance had rebounded strongly during the second half of the year.
The prospect of a major revolt comes a year after more than 40% of shareholders opposed Pendragon’s remuneration policy, falling narrowly short of the threshold above which the company would have been forced back to the drawing board.
Institutional Shareholder Services (ISS), an influential proxy adviser, said in a report to clients that despite last year’s protest vote, the company “does not appear to have addressed the underlying concerns in any meaningful way”.
The voting advisory service run by the Investment Association has issued its strongest alert to shareholders about Pendragon, saying that its bonus decisions looked questionable.
“Shareholders will have to be satisfied that this bonus payout for the executive directors is commensurate with the experience of employees, shareholders and other stakeholders,” the IA’s service, IVIS, said.
In a blog post published on Friday, Legal & General Investment Management said it planned to vote against several resolutions, including the remuneration report.
“The remuneration committee approved a bonus payment to executives that we do not consider a fair reflection of the stakeholder experience,” it said.
“The committee reset the bonus calculation and set a performance target that only assessed performance for the second half of the financial year, which was met in full.”
The fund manager said it would vote against both Mr Berman and Mr Wright, raising the possibility of the pair facing a battle for re-election.
LGIM added that it would also oppose the reappointment of KPMG as Pendragon’s auditor because of its 24-year tenure in the role.
Pendragon’s showdown with shareholders will be the latest flashpoint involving a major UK company during a period of heightened sensitivity around boardroom pay.
This week, Cineworld saw a major revolt over incentive arrangements for its top executives, while AstraZeneca, BAE Systems and Rio Tinto have all been hit by substantial protest votes in recent weeks.
Pendragon declined to comment.