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Equipment rental company Ashtead has defended a planned pay deal of up to about $14mn for chief executive Brendan Horgan, despite advisory firms urging shareholders to vote against such “excessive” remuneration.
Ashtead, which is listed on the FTSE 100 and trades as Sunbelt Rentals, is aiming to garner support from shareholders at its annual meeting next month for a three-year pay policy that would potentially double the total amount that Horgan could earn this financial year.
But the group’s proposals have been deemed excessive by proxy advisers ISS and Glass Lewis, which are urging shareholders to vote against the policy. Horgan, a US resident, was paid a total $7.26mn last year.
Ashtead said that its “success relies on continuing to attract and retain high calibre talent — including at executive level — who are residents of the US.”
It added that the policy helped to bring “remuneration into line with relevant competitive market norms”, and the increase reflected Horgan’s “experience and strong track record over the last five years”.
The potential pay increase comes as Ashtead, whose business is 90 per cent concentrated in the US, considers shifting its listing from London to New York. In June it responded to reports about that potential change by saying it “reviews its capital structure regularly, including its domicile”.
Executive pay has risen up the corporate agenda as the London Stock Exchange grapples with a stream of companies opting to list on US trading venues. Julia Hoggett, head of the London Stock Exchange, said last year that executives should be paid more to keep talent and to help prevent British companies from shifting their listings overseas.
A string of companies, including plumbing company Ferguson and gambling business Flutter, have recently shifted their primary listings to the US, while other British businesses, such as chipmaker Arm, have opted to float in New York in search of a higher valuation.
Under Ashtead’s pay proposals, Horgan could receive up to 700 per cent of his $1.2mn base salary, based on performance, and restricted shares of up to 150 per cent, which vest if certain conditions are met. The story was first reported in the Times.
ISS said the planned changes “represent a significant deviation from UK market practice”, noting that “while the company’s rationale for some level of increases for its US based executives are partly acknowledged, the extent of the proposed changes is considered excessive”.
Glass Lewis said that it was “concerned with the opportunity available to the CEO under the proposed long-term incentive plan”. It added that its “concerns regarding the significant quantum increase absent a compelling rationale for its necessity” means it “cannot recommend that shareholders support this proposal”.
Ashtead said: “The remuneration committee has conducted a thorough review of the remuneration policy to ensure Ashtead’s offering at all levels remains aligned to the Group’s pay philosophy and is credible in the markets in which it operates.”
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