The fund manager Schroders is at risk of a shareholder backlash after an influential advisory firm issued a warning about “excessive” bonuses and the appointment of a Schroder family member to its board.
Glass Lewis has recommended that at next month’s annual meeting investors vote against the company’s pay report, as well as the election of Leonie Schroder, claiming she lacks the experience needed to challenge the firm’s executive team.
It has also urged investors to block the re-election as chairman of Michael Dobson, who Glass Lewis says is responsible for the board’s make-up and “should be held accountable for this failure”.
The advisory group said it had “severe reservations” about supporting the pay report due to the size of the bonuses granted to chief executive Peter Harrison. Harrison, who has been at the helm since 2016, was given a £6m bonus last year on a £500,000 salary.
“We remain concerned that the annual bonus plan has consistently led to unnecessarily high payouts,” Glass Lewis said. “We cannot recommend that shareholders support this proposal.”
A spokeswoman for Schroders said the company has a “clear and thorough process” for determining pay “which we have followed rigorously and which has served the firm and all its stakeholders well over many years”.
The Glass Lewis report also takes aim at Leonie Schroder, whose family holds a 35% controlling stake in the business. She was appointed in March following the death of her father, Bruno.
Glass Lewis said controlling shareholders should be “entitled” to representation, but stressed that directors need to have the experience to guide and challenge the executive team.
“We do not believe a sufficiently robust rationale has been presented for the election of nominee [Leonie] Schroder, and question whether, in representing her family interests, she has sufficient core industry or sector experience to effectively challenge management,” the advisory firm explained.
Schroders said the decision to appoint Leonie Schroder followed consultations with key members of the family trust and main shareholder group following Bruno’s death in February.
“After careful consideration, the nominations committee decided to recommend to the board her appointment as a director,” a spokeswoman said.
“As part of the nominations process, the company also engaged with a number of institutional shareholders – all indicated support for the proposal to appoint Leonie Schroder, given the overall mix of skills on the board and the majority of independent non-executive directors,” she added.
The Schroders AGM will be held in London on 2 May.
