Diageo, the embattled owner of Guinness and Johnnie Walker whisky, faces an investor backlash next month over almost £8.5 million in share awards handed to the front-runner to become its next chief executive.
Sky News has learned that Diageo investors are being asked to vote against its remuneration report at its annual meeting in early November due to concerns over the lack of performance conditions attached to shares awarded to Nik Jhangiani.
Mr Jhangiani joined the company, which also owns Baileys and Smirnoff, as chief financial officer just over a year ago.
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In July, he was elevated to interim CEO after Debra Crew was ousted due to the company’s poor performance.
Glass Lewis, a leading proxy advisor that makes recommendations to institutional shareholders on voting decisions, called on shareholders to object to Diageo’s pay report because of Mr Jhangiani’s recruitment rewards.
“Given the significant amount of the awards, approximately £8.48 million, we believe that shareholders could reasonably have expected further clarity as to the determination of the conditions associated with such awards,” Glass Lewis said.
“In the absence of a compelling rationale for the non-performance-based nature of the majority of the awards, we believe this issue precludes shareholder support for this proposal at this time.”
The vote on the remuneration report is advisory only and the result is not binding on Diageo.
In response to Glass Lewis’ recommendation, a Diageo spokesperson said: “The recruitment deal was primarily in shares and was intended to compensate Nik for what he had lost from his former employer by joining Diageo.
“When determining the structure and value of a recruitment agreement, the remuneration committee ensures that this remuneration has a fair value, not greater than that of the foregone rewards.
“As executive director, Nik is subject to a shareholding obligation both during his tenure and after his tenure.”
Mr Jhangiani is widely seen as Ms Crew’s most likely permanent successor, with an appointment possible as early as next month.