Lookers has said that it will continue to “review the appropriateness of the remuneration policy” following a shareholders’ revolt centred on the £450,000 pay packet of chief executive Mark Raban.
Despite attempts to assure investors that “the Remuneration Committee did not believe a suitable candidate could be secured for lower remuneration than that offered to Mark” in a note to investors, 28.91% of shareholders voted against the remuneration report at the troubled AM100 PLC's general meeting.
Lookers said that its Remuneration Committee would reflect on the action taken by shareholders in the vote and communicate the specific actions it intends to take.
It added: “As noted in the recently published annual report, the Remuneration Committee will continue to review the appropriateness of the remuneration policy as the business strategy evolves during the early part of 2021 and will continue to engage to the extent any changes are proposed.”
Ahead of last week’s general meeting several advisory bodies produced reports which highlighted issues associated with matters to be addressed.
Some highlighted the possibility of a vote against the adoption and receipt of the financial statements and against the Remuneration Report, which included detail of Raban’s pay.
Lookers said that it had carried out a remuneration benchmarking exercise prior to embarking on the recruitment of a new CEO and found that an increase to the salary to £450,000 “was market-aligned”, adding: “There was a need to recruit a competent leader to steer the company through a challenging period.”
While external candidates were considered, Mark Raban was selected as the best candidate for the role, given his strong performance and knowledge of the business through his tenure as CFO, it said.
Lookers also told shareholders that 2020 had been a very challenging year for the business, highlighting the Remuneration Committee’s commitment to reducing costs by reducing salaries for a period during 2020, as well as cancelling both bonus and LTIP awards for the year.
It added: “We believe that a recommendation to vote against this is therefore harsh in the context of the decisions made in 2020, which included salary reductions for executives and non-executives, no bonuses being paid for 2019 and no LTIPs being awarded.”
The COVID-19 lockdown in the first half of 2020 cost Lookers – already battling to deal with an internal fraud investigation and separate investigation by the Financial Conduct Authority (FCA) – £1bn in lost revenues.
In November, the group finally published its long-awaited 2019 financial results, showing a £87.4m swing into pre-tax losses caused partly by past financial overstatements.
The motor retail group, the second largest in the UK, reported £25.5m of non-cash adjustments “to correct misstatements in PBT over a number of years”, its statement to the stock market notes.
It contributed to a statutory pre-tax loss of £45.5m compared with a pre-tax profit of £41.9m in 2018.
However, Lookers pointed out that 2019 remained profitable at the underlying PBT level of £4.2m, although down on 2018’s £42.8m, despite the impact of the adjustments.