MORE than one third of sausage skin maker Devro’s shareholders voted against the directors’ remuneration package at its annual general meeting yesterday, as a result of previous financial director’s Simon Webb’s exit package.
The sausage skin maker, reported earnings in line with expectations and reinforced its commitment to growing market share in the US and China. This is part of a long-term growth strategy that the company said wouldn’t be possible without its “centre of excellence” in Moodiesburn.
Chief executive Peter Page said after the AGM that he wasn’t that surprised at the revolt and he understood why 35 per cent of shareholders had rejected the resolution.
“[The shareholders] had two points and they’re both understandable. Some questioned that he got bonus for last year and also pro rating his time on the long-term package,” said Mr Page. “But you’ve got to balance that with him staying with the business through the transition, making a very effective handover. And it was all within the agreed terms of the remuneration policy that we put out two years ago.”
The board announced Mr Webb’s departure in November 2015, saying both parties agreed it was an “appropriate” time for him to leave. Mr Webb agreed to a 12 month notice period, but with Mr Helbing appointed earlier this month, the balance of Mr Webb’s £297,147 base salary was paid in a lump sum.
In addition, non-financial targets in his 2015 bonus plan were deemed to have been achieved in full - meaning that Mr Webb was paid 74.8 per cent of his salary, including 20 per cent for non-financial targets. Mr Page received a 54.8 per cent bonus because the company failed to hit non-financial targets.
Mr Webb’s pro-rated bonus for 2016 will also be based purely on 2016 operating profit. Any unvested long-term awards will vest at their normal date.
In its annual report, Paul Neep, chairman of the remunerations committee said: “We accept that discretion in these situations should be exercised judiciously and [we are] satisfied that this settlement is fair”.
Chairman Gerard Hoetmer said at the meeting that the board would be reviewing the remuneration policy as a result of the backlash against Mr Webb.
At the meeting, Mr Page highlighted the expansion the company was making in the US and China. £60m has been invested in a new facility in China, which will be fully operational by the end of 2017. A new £50m facility in South Carolina is months away from full operation.
“China is growing very fast,” said Mr Page. “It’s not plateauing but there are more organisations now, more people in cities and towns and the whole diet has changed quite significantly.”
Mr Page revealed the company had now received Government approval for its products, marking an important milestone in its development in the country, however he said it was a slow burner.
“We’re speaking to new leads… it’s better to build at the right pace and the right time, build up our margins and our customers,” he said. “We’re putting investment in now and looking at a five to ten year horizon. We hope we’ll be in profit before that but it’s a toe-hold that we can build on.”
Mr Page said the US market would continue to take a high proportion of group sales. “[Opening the new facility] is big move for us. We can now grow market share, make cost savings. It’s a far more immediate return [than China],” he said. “We’ve got more sales guys out there, but also we’ve been constrained by capacity at the old factory and products from the new factory will be able to compete better.”
In the UK, the loss of 130 jobs in 2013 was part of a major restructuring. Mr Page said that “production is tremendous here, morale is good.”
He added: “There are new products coming out of Bellshill for the US market, there’s been preparing for the expansion in China. Glasgow remains our centre of excellence, we could never have done what we’ve done in China without our expertise in Glasgow.”
After posting operating profits of £33.3m and earnings per share of 15.4p on revenues of £230.2m, Devro confirmed a dividend of 8.8p for the third consecutive year.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here