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LONDON, April 22 (Reuters) - Britain's biggest defence
contractor BAE Systems is facing mounting criticism for
handing its chief executive an extra 2 million pounds ($2.8
million) to convince him to stay after another bluechip company
tried to poach him.
Institutional Shareholder Services (ISS) recommended that
investors vote against BAE's remuneration report, joining
another shareholder adviser group, Glass Lewis, which earlier in
April also recommended opposing it.
ISS said in its note that the extra pay awards given to BAE
Chief Executive Charles Woodburn were "well outside market
norms".
"Moreover, one-off pay awards to address retention concerns
have frequently been shown to be ineffective, and are therefore
not typically supported," ISS said.
Woodburn received a salary rise of 13% at the start of 2021
to bring his annual pay to 1.1 million pounds. He is also in
line for an extra 2 million pound long-term share award payable
if he stays at BAE until the end of 2023.
Shareholders will vote on the remuneration report at BAE's
annual meeting on May 6.
BAE announced the pay increase in its annual report,
explaining that Woodburn had been offered the top job at a major
international public company based in the UK, named by Sky News
as mining giant Rio Tinto.
Woodburn worked in the oil and gas industry before joining
BAE as chief operating officer in 2016 and taking on the chief
executive role in 2017.
Given the sensitive nature of BAE's defence work for
Britain, BAE's chief executive must be a British citizen. That
recruitment challenge plus the complexity of BAE's business and
Woodburn's track record to date made the company keen to retain
him.
Top shareholders support the company's decision, BAE said.
"We’ve proactively engaged with our top shareholders on the
matter, who are overwhelming supportive of the board's actions,"
a spokeswoman for BAE said via email.
($1 = 0.7219 pounds)
(Reporting by Sarah Young
Editing by Keith Weir)
