Directors at UK shipbroker Clarksons are once again talking to shareholders about its controversial pay policy.
The issue has been a recurring thorn in the London-listed group’s side for a number of years due to legacy contracts for chief executive Andi Case and finance and operations chief Jeff Woyda.
The broking company enjoyed a record year in 2021, with net profit hitting £54.7m ($72.1m), up from £35.2m in 2020.
The annual report reveals Case’s overall remuneration package for the year more than doubled to £6.78m ($8.85m), from £3.17m the year before.
Woyda’s total remuneration is £2.53m for 2021, up from £1.12m.
The pair’s basic salaries were unchanged once again at £550,000 for Case and £350,000 for Woyda.
Case has not had a rise since 2010 and Woyda since 2015.
But the company’s annual general meeting is due on 11 May.
Last year, shareholders revolted in increased numbers against the pay policy.
Only 60% of votes were cast in favour of the remuneration report, down from 67% in 2020.
Squeaked home in vote
In 2019, a charm offensive by directors saw the brokerage scrape over the line that year with 51% of the vote.
A new policy introduced in 2020 kept the legacy terms in place for the top two, but new hires will face more traditional corporate deals.
Remuneration committee chairman Tim Miller and new group chairman Laurence Hollingworth have been speaking to shareholders and will continue to engage with them in the weeks ahead, TradeWinds is told.
Miller said: “Retaining our excellent staff and leadership in this highly competitive market is a critical risk for shareholders and therefore a priority for the board.”
“Whilst we recognise that our executive pay arrangements do not accord with the norm for the FTSE 250, they are in line with the pay arrangements of other shipbrokers and commission-based businesses,” he added.
Miller said the pay structure is proven to work.
Keeping talent in place
Clarksons has always said it operates in a very competitive environment for talent and leadership, where all but Braemar Shipping Services of its rivals are private companies.
Case is rewarded not only as a CEO but as one of the biggest fee-earning brokers in the game. Woyda also performs multiple roles.
The idea is to manage pay within industry cycles.
Adopting the FTSE or financial markets “norm” of higher fixed salaries with capped bonus arrangements would significantly hinder this and be an inappropriate model for the business, Clarksons believes.
The pair have waived 8.5% of their 2021 bonuses so the cash can be distributed to workers.
Big returns to staff
The amount handed back by the duo over the last five years totals £4.28m.
Case’s 2021 bonus was £4.72m.
The group has logged 19 straight years of dividend growth.
Case became CEO in 2008, and since the Clarksons share price has risen from £3.20 to £35.90 today.
Someone investing £10,000 then would have a stake worth £112,000 today.
The annual report reveals executive directors are set for long-term incentive share awards worth up to 150% of salary in 2022.
