BAE Systems is facing a possible shareholder rebellion over its decision to hand its chief executive a £2m golden handcuffs deal after investors were told to oppose it.

Sky News has learnt that Glass Lewis, the proxy voting adviser, has urged shareholders in Britain’s biggest defence contractor to vote against its remuneration report at this year’s annual meeting.

Glass Lewis’s recommendation increases the prospect of a revolt over the decision to incentivise Charles Woodburn to stay at the company following a poaching attempt by the miner Rio Tinto.

BAE disclosed in its annual report that it had hiked Dr Woodburn’s base salary by well over £100,000 and awarded him an additional share package worth £2m – payable if he stays for three years.

Several investors said they had been reassured by chairman Sir Roger Carr’s explanation of the decision, adding that BAE’s comprehensive disclosure of the issue meant they were likely to support the company’s pay report.

A BAE spokeswoman said: “We’ve proactively engaged with our top shareholders on the matter, who are overwhelming supportive of the Board’s actions.”

The talks between Dr Woodburn and Rio Tinto initially focused on him joining the miner’s board as a non-executive director, before he was instead invited to fill the vacant chief executive’s role.

Owing to the sensitivity of BAE’s work on numerous government defence contracts, it must have a British chief executive who can hold the highest level of security clearance.

That requirement is a complicating factor in succession planning, heightening the importance of retaining him, the company told shareholders.

“The board also reflected on the past challenges faced by the company in recruiting a chief executive some four years ago, the time taken for him to build a comprehensive understanding of a complex international business, the generational change of leadership that is now in process, and the potential damage that the early departure of Dr Woodburn would inflict on the company, important government customer relationships and shareholders,” BAE’s annual report said.

Related posts:

Business confidence hits record high as firms see boost from pent-up demand British cyber security firm Darktrace confirms intention to float on London Stock Exchange Portugal holiday restart in peril due to EU ban on non-essential travel Portugal confirms UK tourists with negative COVID test allowed to travel from Monday EasyJet chairman Barton takes flight amid recovery hopes Very Group owners pick banks for £4bn online shopping group IPO Ocado faces £5m hit to pay drivers higher wages and signing-on bonuses More people are in work, it’s the TUC annual congress and cyber security All countries on red list to be removed as ‘less effective’ in slowing Omicron Currys reveals pre-Christmas sales slowdown as supply strains and Omicron uncertainty take toll Surging inflation could dwarf other issues in the political landscape as households feel the strain PlayStation maker Sony in shares slump after Microsoft’s Activision Blizzard swoop