UK Edition
Reckitt Benckiser slashes boss Rakesh Kapoor's pay after South Korean scandal
Reckitt Benckiser, the maker of Dettol and Durex, has slashed the pay package for its chief executive after awarding £300m last year in compensation to South Korean families whose relatives died after using its disinfectants.
Rakesh Kapoor, previously the third highest-paid FTSE 100 boss, has had his pay cut by more than a third from £25.5m to £14.6m in 2016, after missing out on a lucrative bonus.
Judy Spieser, chair of the remuneration committee, said it had taken the South Korea issue in "the context of pay decisions for 2016", despite Mr Kapoor not being in charge of the business when the scandal happened between 2001 and 2011.
Reckitt Benckiser also said that it would be reducing the size of its long-term incentive plans (LTIP) by 50pc for future years, which would slim down Mr Kapoor's future payouts.
Last year 17.7pc of shareholders voted against Mr Kapoor's remuneration package and the company came under intense pressure from investors and lobby groups who criticised excessive pay and soaring awards made via LTIPs.
The company has also attempted to soothe investor disquiet about the motivation behind its £14.2bn takeover of Mead Johnson.
Critics had argued that the takeover of the US baby milk business was an attempt to buy growth, following a softening in sales, and boost its earnings - to which Mr Kapoor’s pay is directly linked. If the Reckitt boss had lifted earnings per share by more than 10pc over the next three years, he would be in line for share awards worth £15.4m.
Reckitt Benckiser said that following "extensive engagement with our shareholders" it would strip out the boost to earnings from its Mead Johnson takeover when considering Mr Kapoor's bonus.
The company said that it would also "exercise downwards discretion" on LTIP awards if synergies or benefits from the baby food deal did not meet expectations.
One top 10 shareholder said that he would either abstain or support this year's remuneration report at the annual meeting as the company had addressed his most pressing concerns about the rising pay.
British companies are being forced to rethink their pay policies after investors such as Blackrock warned that they planned to vote against directors and reports where they believed their was evidence of excessive corporate pay.
Prime Minister Theresa May has also made tackling corporate excess a priority and there are plans to beef up shareholder powers by forcing companies to respond to protest votes. Currently, votes on pay are only binding every three years.