Warning over “excessive” Paul Walsh pay-out

The proposed multi-million pound pay package for Paul Walsh, former chief executive of Diageo, has come under fire from an influential shareholder advisory firm.

Paul Walsh could receive a pay-out of £18.2m if Diageo’s remuneration report is approved by shareholders on Thursday

Manifest, a governance data and intelligence agency, has stated in a report to its clients that the drinks giant is awarding top executives “excessive” pay.

It was announced earlier this year that Diageo intended to award Walsh £18.2 million following his retirement from his role as CEO in June 2013.

At its AGM this Thursday (19 September), Diageo investors will vote on a remuneration report which recommends the multi-million pound package for Walsh, with Manifest estimating it was likely some shareholders would vote against it.

The report also recommends a basic salary of £1m for Walsh’s replacement Ivan Menezes, who took over the role in July 2013.

Manifest criticised Diageo for having the potential for excessive levels of incentive pay and poor annual bonus target disclosures, as well as weak performance targets.

Walsh was named one of the best paid bosses in the FTSE 100 last year, having amassed a shares and pension fund of over £46m by the time he stepped down as CEO, with ordinary shares worth £16.1m, and a pension fund of £18.5m.

He will remain in an advisory role to Menezes until June 2014 to “ensure a smooth and carefully managed hand-over”.

Should his package be approved this week, it has been speculated that it could be one of the most generous pay-outs in British corporate history.