Yesterday (23rd May) I attended the Annual General Meeting of GoCompare.com Group (GOCO) which was actually renamed GoCo Group at the meeting. This was held in the City of London at 3.00 pm but even so there were still very few ordinary shareholders present – less than ten I would guess.
The company’s main business is a price comparison web service, particularly focused on car insurance, but also covering utilities and other products. It is of course fronted by Italian opera singer Gio Compario (aka Wynne Evans) in TV advertisements. They also have a “Rewards” business providing discount vouchers which they recently acquired and a new business called WeFlip that automates utility switching. The company is chaired by Sir Peter Wood, founder of Esure and Directline insurance companies and he recently purchased about 4% of the business.
Sir Peter introduced the board and then invited questions. I was the only shareholder who asked any questions and I focused on the remuneration. For some background it’s worth noting that the CEO, Matthew Crummock, received a total (single figure) remuneration of £1.59 million in 2018. This is for a company that had revenue of £152 million and pre-tax profits of £33.8 million last year. For 2019 his basic pay will be increased by 12.5% to £450,000 and his maximum opportunity on an LTIP from 200% of salary to 230%. He also gets an annual bonus and “PSP” awards. A typically very complex scheme which results in a 19-page Remuneration Report!
I asked why awards under the “Foundation” bonus scheme were made when the performance targets were not met. It was stated that they were only £1 million short on revenue so the remuneration committee decided to award the bonus and the board supported it.
I also asked about the non-specific Bonus and PSP targets for 2019 given on page 57. What were the “Selection of people and cultural measures” and the “Customer centric measures”? At this point the Chairman suggested that these questions be handled after the meeting but I insisted they should be answered then which he conceded. Some reasonable answers were then given. But I advised the Chairman that I would be voting against the Remuneration Report as I considered it too generous.
Voting was then taken on a poll. But the Chairman advised there were substantial votes against the Remuneration Report on the proxy counts. In fact there were 25% of votes against the Remuneration Report and 15% of votes against Angela Seymour-Jackson who chairs the Remuneration Committee. There were also 11% of votes against Non-Exec Zillah Byng-Thorne perhaps because she is also CEO of Future Plc and also a non-exec at Paddy Power Betfair – too many jobs I suggest.
I spoke to Angela Seymour-Jackson after the formal meeting. She said she was disappointed that institutional shareholders voted against the Remuneration Report. She mentioned the payment of a bonus when the performance target was not met was one reason. I said a bonus target is a target that should be met, otherwise the bonus should not be paid. There will likely be more consultation with investors.
I also explained that I dislike LTIPs because they have been one reason why executive pay has ratcheted up in the last few years, and I particularly dislike those that pay out more than 100% of salary. I told her that bonus schemes need to pay out quickly if they are to provide real incentives, i.e. within months not years. She said they were constrained by the guidance in the Corporate Governance Code. Comment: in fact the latest version of the code does not mandate LTIPs and in any case the Code is always a “comply or explain” system. Companies can adopt better systems if they choose to do so and explain why.
This company is a typical example of why executive pay is out of hand and there is no sign that the directors of such companies are likely to change their ways. The widespread public concern over excessive pay and over-complex remuneration schemes that might pay out very large sums has not yet resulted in any change of policy and remuneration committees are still a soft touch. Change is needed.
Otherwise this was a poor quality meeting – no trading statement issued on the day, no presentation, and minimal shareholder attendance. But I did pick up from talking to one of the directors that the WeFlip business, in which the company is investing millions this year, is ahead of internal targets. But the company will win no prizes for its corporate governance.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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