8th May 2015 14:13
LONDON (Alliance News) - Hedge fund manager Man Group PLC Friday survived a big rebellion when a significant minority of shareholders rejected its remuneration policy and remuneration report.
While the UK was responding to a surprise outright Conservative victory in the General Election, the results of Man Group's annual meeting of shareholders revealed that 43% of votes cast went against the directors' remuneration policy and 35% went against the remuneration report.
The protest vote wasn't big enough to stop Man Group's proposal to increase the maximum short-term cash incentive that can be paid to executive directors to quadruple base salary from the previous 250% of base salary. The passing of the remuneration policy also means that the maximum bonus under the FTSE 250 constituent's long-term deferred executive incentive plan has increased to 525% of base salary from 350% previously.
Man Group said changes to its remuneration policy are designed to ensure it can compete with rivals. The industry made headlines earlier this week, when Institutional Investor's Alpha magazine found that the top 25 hedge fund managers combined made USD11.62 billion in 2014, under than half the USD21.15 billion in the previous year.
Chief Executive Manny Roman and Chief Financial Officer Jonathan Sorrell were paid the full short-term cash bonus of 250% of base salary in 2014. Roman's base salary was USD1.0 million in 2014 and will remain at that level in 2015, while Sorrell's was USD625,000 but the company's remuneration committee recommended that it be increased to USD750,000 from April 1.
Both Roman and Sorrell were awarded 40% of the 350% maximum of base salary under the deferred executive incentive plan. Roman's total remuneration package increased to USD5.1 million in 2014 from USD3.4 million the previous year, while Sorrell's increased to USD3.2 million from USD2.6 million.
The executives presided over a good year in 2014. Funds under management increased to USD72.9 billion from USD54.1 billion as acquisitions, net inflows and positive investment performance more than offset negative foreign currency movements. Profit before tax, adjusted for factors such costs relating to acquisitions and litigation, increased to USD481 million from USD297 million, while net profit increased to USD365 million from USD72 million.
Man Group shares rose about 80% over the course of 2014.
"The changes to the remuneration policy approved by shareholders provide the board with additional flexibility to reward any higher levels of future performance at an appropriate level, taking account of the competitive dynamic of the global hedge fund industry within which Man Group operates," the hedge fund manager said.
"The vote on the remuneration policy is an enabling vote only and actual awards will continue to be determined by performance. The board has demonstrated its disciplined and rigorous approach to remuneration decisions in the past and will maintain these standards in future," Man Group added.
The FTSE 250 constituent said shareholders will be able to "express their views on the board's judgement in applying the new policy to future reward decisions through ongoing consultation and ultimately through their vote on the directors' remuneration report each year".
Man Group said an "extensive period of engagement" with shareholders prior to the meeting found that the majority of the investors consulted were "supportive" of the policies.
Earlier on Friday, Man Group reported a net outflow USD1.3 billion in the first quarter of 2015.
However, funds under management increased to USD78.1 billion from USD72.9 billion in the period, as positive investment performance added USD4.3 billion to funds and the completion of the acquisition of Connecticut-based Silvermine added USD3.8 billion, more than offset the net outflow and a USD2.0 billion hit mostly relating to the strength of the US dollar.
Man estimated that current funds under management amount to USD82.0 billion due to its acquisitions of equity investment manager NewSmith LLP and Bank of America Merrill Lynch fund of funds.
Man shares were down 0.6% at 177.90 pence on Friday afternoon in London.
By Samuel Agini; [email protected]; @samuelagini
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