Pendragon CEO’s ‘out of tune’ bonus payments approved despite AGM revolt

Pendragon chief executive Bill Berman will receive bonus payments criticised as being “out of tune” despite a 42.2% vote against the PLC’s director remuneration at today’s AGM.

Shareholders attending the meeting this morning voted 41.04% against the re-election of non-executive director and  remuneration board chairman, Mark Wright, and 20.91% against the re-election of Berman to the board in a show of opposition against the payments.

But all 17 resolutions tabled at the meeting were passed nontheless.

The AM100 car retail group’s second-largest shareholder, Hedin Group, yesterday joined objections already voiced by Legal & General Investment Management, asserting that it would vote against a number of resolutions at tomorrow’s AGM, including the AM100 group’s remuneration report.

The moves came as Pendragon were set to table the proposed remuneration report, which included the payment of a deferred bonus worth £413,000 to Berman – a payment that looked set to take his annual rewards to £3.2m.

Sky News reported on the potential for a “massive shareholder backlash” at the weekend, with the focus very much on Berman’s six-figure bonus.

It said that the payment was proposed despite the business’s axing of 1,800 jobs and utilisation of millions of pounds of taxpayers' money to furlough staff through the Coronavirus Job Retention Scheme (CJRS).

In his statement, issued yesterday, Anders Hedin, said: “This needs to stop as it is totally out of tune with what all other stakeholders in the company are experiencing and the amount of taxpayer support received.

“There is still no independent chairman of the company to represent shareholders and stop this excessive executive director pay.”

Legal & General Investment Management had previously said that it did not consider that the proposed bonus payments to Pendragon’s executives were “a fair reflection of the stakeholder experience”.

It added: "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."

Speaking to AM this afternoon former ASE chairman Mike Jones said that, despite all 17 AGM resolutions being passed by shareholders today, the issue of senior executive’s remuneration “will not go away” for Pendragon.

Jones said: “There’s a belief that the remuneration package that’s been drawn-up , for Bill in-particular, but also the rest of the leadership team, and not aligned to shareholder interests.

“That will not go away just because they have got through today’s votes.”

AM was awaiting a comment from Pendragon as this article was published.

Back in March, Pendragon’s 2020 annual financial results detailed an underlying profit before tax of £8.2m after the group turned around a £31m underlying loss before tax in lockdown-hit H1 trading to deliver £39m underlying PBT in the second half of the year.

Improved profitability was delivered despite a 35.1% decline in turnover to £2.92bn (2019: £4.51bn).

Last year also saw Berman and his team roll-out an organisation structure review delivering annual equivalent benefit of over £35m.

The developments included closure of 15 dealerships – resulting in an annual equivalent benefit of over £2m – as the group embarked on its new strategy to rebrand and restructure its Car Store used car division and increase its focus on digital sales as it targets underlying profit before tax of £85m to £90m by it 2025 financial year.