L&G revolts in furious bid to oust Cineworld pay committee

One of the City’s most influential investors will next week revolt against the entire board pay committee at Cineworld as shareholder anger against pandemic reward packages boils over.

Sky News has learnt that Legal & General Investment Management (LGIM) has decided to vote against the re-election of Cineworld’s chair, Alicja Kornasiewicz, and all three members of the company’s remuneration committee, at its annual meeting on May 12.

The decision – a rare one on a specific issue such as executive pay – reflects enormous anger among institutional investors about the behaviour of Cineworld’s directors, who have presided over billions of pounds of losses caused by the COVID-19 pandemic.

Cineworld has furloughed tens of thousands of staff, and shut hundreds of cinemas as a result of the crisis, but infuriated shareholders by proposing a bonus scheme earlier this year which could hand more than £60m to its top two executives.

Although that vote was passed – partly as a result of the large stakes held by chief executive Moshe Greidinger, and his brother and deputy, Israel – the company will hold votes next week on both its remuneration report and policy.

In a previously unreported blog-post, LGIM said it had chosen to “escalate” its voting intentions and oppose the four board members’ re-election next week.

“We have strong concerns about the structure of the long-term incentive plan granted to the executives, and its misalignment with the long-term interests of the company and other stakeholders,” LGIM said.

“In particular, we note the impact of COVID-19 on the company’s financials and stakeholders, including furloughs for employees and the suspension of dividends.

“We also take into account the current social sensitivities around income inequality.”

One investor suggested that Dean Moore, the non-executive director who chairs Cineworld’s remuneration committee, could face a battle to salvage his seat on the board.

Institutional Shareholder Services (ISS), a leading proxy adviser, has recommended that investors oppose his continued tenure, and is also against Cineworld’s pay report and policy.

The timing of the shareholder vote threatens to be particularly awkward for the cinema operator because it coincides with the company’s ability to reopen its UK multiplexes.

Cineworld plans to reopen UK cinemas when government guidelines allow. Rival Odeon set out details of its reopening plans earlier this week.

A major revolt against the quartet of Cineworld directors would underline the levels of anger among investors over executive pay during the pandemic.

LGIM had previously warned that bonuses and lavish share awards were inappropriate for any companies which had received government support during the last 13 months.

It said that despite having registered its concerns about the LTIP award in January, it was “concerned by the lack of response from the company’s remuneration committee and board”.

Cineworld is far from the only company to have angered City institutions, though.

On Thursday, more than half of Rio Tinto shareholders voted against its remuneration report following a decision to hand a multimillion pound exit package to its former chief executive despite uproar over the company’s demolition of an ancient Aboriginal site last year.

Others to be hit by significant protests include BAE Systems, the defence contractor, over a golden handcuffs deal for its chief executive; and the London Stock Exchange Group, which handed its chief executive a big pay rise simply for having undertaken a multibillion pound acquisition.

Cineworld declined to comment.

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