Diageo bonuses backed by shareholders

Drinks giant Diageo has brushed off criticism regarding its “excessive” executive bonuses to gain strong support from investors at its annual general meeting (AGM).

Diageo executives received strong support from investors for bonus packages

The Sunday Times reported earlier this week that governance groups and shareholders had slated remuneration packages paid to top Diageo executives as “excessive” compared to their basic salary, and warned shareholders could revolt at its AGM on Thursday.

However, despite the speculation early proxy results revealed 97% of voters supported the report of the past year’s pay and the policy put in place for the coming years.

It came as Lord Davies, chairman of Diageo’s remuneration committee, defended the company’s pay policy, which saw Diageo CEO Ivan Menezes, whose basic salary is just £933,000, earn £7.7 million in pay and bonuses in 2013/2014.

Finance director Deirdre Mahlan, who earns a basic salary of £706,000, received £3.7 million.

On Wednesday, shareholder corporate governance group, Pirc, condemned the bonuses as “excessive”.

“We have had overwhelming support [for the remuneration policy and report] from our shareholders,” Davies said at the AGM, as reported by The Scotsman.

“We are competitive. We are not overpaying. We did not pay big bonuses because the performance was not there.”

Bonuses paid out to company executives were just 8% of the maximum amount available at the beginning of the year as sales targets were missed.

Diageo revealed in its 2013/14 financial results that its net sales had declined by £1.1 billion, largely to the “severe impact” of China’s on-going crackdown on extravagant gift giving.