W H Smith faces investor revolt over Cowling bonus

W H Smith faces a revolt among its investors over plans to pay chief executive Carl Cowling a £550,000 bonus when it has not repaid money from the furlough scheme.

Sky News reported that three of the main proxy advisers, which issue guidance to City shareholders ahead of annual meetings, have signalled their opposition to the bonus and said a "substantial proportion" of investors are expected to vote against both the company's remuneration report and pay policy at its annual general meeting on 19th January. 

Glass Lewis, the shareholder advisory group, told its clients: "While we acknowledge that the company has taken certain measures to ensure the appropriateness of executive remuneration outcomes in the context of the broader stakeholder experience, we remain concerned by the decision to pay annual bonus awards to executives given the receipt of Covid-19-related government support during the year under review.

"In line with market best practice expectations, we consider it inappropriate for executives to receive bonus awards where funds of this nature have been availed of but not repaid, as was the case here."

A spokesperson for W H Smith said: "Despite being among the businesses hardest hit by the pandemic, W H Smith has emerged in a strong position and anticipates a return to profit in 2022. This is as a result of the hard work of all our people, led by our executive directors.

"The remuneration arrangements published in our annual report and accounts are consistent with the remuneration policy which over 98% of shareholders supported in 2019 and come alongside the award of bonuses to approximately 1,750 colleagues across our stores and head office to recognise their exceptional efforts through the pandemic."

In November 2020 the retailer was forced to withdraw plans to hand Cowling a one-off share award potentially valued at £4.5m following a shareholder backlash. Last year a third of shareholders voted against the company's remuneration report, forcing it to delay a pay rise for Cowling. 

The first stage of that pay increase was handed to him in September, taking his basic salary to £575,000, with a further £25,000 being awarded from April this year.