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Universal Music’s £119m CEO pay offer may provoke shareholder revolt

Universal Music Group could become the latest company to face an embarrassing shareholder revolt this AGM season, after an influential advisory firm urged investors to reject an “excessive” €139m (£119m) payout for its chief executive, Lucian Grainge.

Glass Lewis said it had “severe reservations” about supporting the Dutch-American music company’s pay decisions, which included a €92m share-based bonus for its British-born CEO that easily made up for a 51% cut in his salary, to €7.5m.

Universal – the world’s largest music company, whose catalogue includes songs by stars including Taylor Swift, Harry Styles and Coldplay – said the bonus pot of shares would be paid out over five years, based on earnings and share price performance. It is meant to make up for a drop in the value of the former parent company Vivendi’s shares after the spin-off of Universal Music Group (UMG) in 2021.

But Glass Lewis, which advises major investors on how to vote at company AGMs, said bonuses of that kind “undermine the integrity of a company’s incentive system and call into question whether the board is truly committed to creating a tight link between pay and performance”.

It also criticised UMG for charging ahead with a major payout despite shareholders having “consistently expressed dissent in this regard”. Last year, 40% of voting investors rejected the remuneration report and the additional one-time payout at last year’s AGM. Any resolution rejected by more than 20% of voting investors is usually taken as a sign of shareholder discontent.

Glass Lewis is now urging investors to reject UMG’s pay report, putting the company on track for another showdown with shareholders at the annual meeting in Amsterdam on 16 May.

There has been a fresh wave of shareholder dissent over large payouts for company bosses. Last week, nearly half of voting investors rejected Smith & Nephew’s plans to raise its chief executive Deepak Nath’s pay packet by around a third to $11.8m (£9.5m). That was despite arguments from bosses that it was necessary to compete with pay offered by US peers, given the company makes most of its revenues overseas.

April saw a shareholder rebellion at AstraZeneca’s annual meeting, where 35.5% rejected the company’s remuneration policy, which included a maximum £18.7m pay packet for the chief executive, Pascal Soriot.

The French carmaker Renault is also steeling itself for a potential backlash at its annual meeting on 16 May in Paris, over the remuneration policy for its chief executive, Luca de Meo.

De Meo, who was paid a total of €5.3m (£4.5m) in 2023, could see his maximum payout hit £9.9m under the new policy, which includes raising his annual salary by a third and increasing his potential bonus to 225% of his new base pay. That is on top of a long-term bonus plan that Glass Lewis warned could result in a €4.4m payout based “purely on non-financial and qualitative criteria”.

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“Glass Lewis does not believe that the company’s remuneration strategy, as currently constituted, is sufficiently aligned with shareholder’s best interests,” the adviser’s report said. “As such, we do not believe that this proposal merits shareholder support. We recommend that shareholders vote against this proposal.”

UMG declined to comment. Renault was contacted for comment.

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