Mitchells sees shareholder protest against pay plans and corporate governance

All Bar One owner Mitchells & Butlers has been dealt a blow by investors amid a backlash against pay plans for top bosses and corporate governance at the group.

The pub firm – which also owns Toby Carvery and Harvester – revealed that nearly a fifth of shareholders (17.5%) voted against its executive pay plans at its annual general meeting (AGM) on Wednesday.

While the policy was approved, with 82.5% of investor votes cast in favour, it saw a sizeable protest, with a further 62,000 withheld votes failing to back the plans.

In a further shareholder revolt, Mitchells saw significant votes made against the re-election of a raft of directors including chairman Bob Ivell.

A quarter of shareholder votes opposed the re-election of Mr Ivell, who has been in the role since May 2011 – far longer than the nine-year cap stipulated in the UK Corporate Governance Code.

The stinging AGM result comes as Mitchells faces anger over its proposals to replace a performance-based share scheme with guaranteed annual awards.

Influential shareholder advisory firm Institutional Shareholder Services (ISS) recently recommended investors vote against Mitchells’ pay policy, warning that “compelling rationale has not been provided to explain how the introduction of the restricted share plan is relevant to the company’s operations and strategy”.

ISS also advised against the re-election of Mr Ivell and three other board directors in view of Mitchells’ failure to meet corporate governance rules.

As well as Mr Ivell’s tenure in the role, the group also falls foul of the code by failing to have at least half its board – excluding the chair – comprised of independent non-executive directors.

ISS said: “A vote against the board chair Bob Ivell is warranted in recognising ultimate responsibility for governance at the company.

“Furthermore, less than 33% of the board is currently comprised of women, which is not in line with the recommendation of the Hampton-Alexander Review.”

The pay controversy follows shortly after the firm’s £350 million capital raise to help it weather the devastating effects of the pandemic, with restrictions forcing its sites to close for most of the past year.

Mitchells revealed in February that it was burning through between £30 million and £35 million every four weeks during national lockdowns and restrictions.

In response to the AGM results, Mitchells said: “The UK Corporate Governance Code contains best practice recommendations in relation to corporate governance yet acknowledges that, in individual cases, these will not all necessarily be appropriate for particular companies.”

In its annual report, it said it had decided Mr Ivell should remain in place as chairman due to the coronavirus crisis.

It said: “The extraordinary events of 2020 and the challenges which the group has faced have made it clear that the decision to confirm that Mr Ivell should remain in place… was the correct one.”

More than half of Mitchells’ shares are controlled by a consortium of investors, including Tottenham Hotspur owner Joe Lewis.

It added that it does not comply with the code on the profile of its board members due to the presence of its four shareholders’ representatives.

“No change is proposed to the shareholder representative profile of the board in the immediate future,” it added in its annual report.