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Shareholder group attacks Hargreaves Lansdown’s “excessive” bonus plans

Hargreaves’ bonus plan opposed by shareholder rights group Pirc.

Activist shareholder group Pirc has expressed concerns about Hargreaves Lansdown’s “excessive” executive bonuses due to be approved at the firm’s forthcoming annual general meeting. 

In a newsletter published yesterday Pirc said remuneration is “a concern” at Hargreaves Lansdown and recommended that shareholders oppose the remuneration report.

It noted chairman Stephen Lansdown and chief executive Peter Hargreaves have a cap on their annual bonus of 300 per cent while the rest of the executives remain uncapped. 

It says: “Awards are made at the discretion of the remuneration committee; no specific performance thresholds, targets or maximum targets are disclosed.

“We also consider that the maximum level of awards for individual employees under the scheme (300 per cent of salary) is excessive.”   

Pirc also highlights the remuneration committee’s intention to introduce a new long-term incentive plan focused on performance by awarding options though share options. 

It says: “Pirc is concerned about the vesting of options without the existence of predetermined, measurable performance conditions and the lack of any disclosed limit on the level of individual awards.” 

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Hargereaves Lansdowne are IFA’s so basically are on th eright side of the fence, but if we are all to have commission banned as evil, and replacemt by customer agreed remuneration as good, I do wonder what about bonuses

    performance related commission is decreed to be evil

    what is so diferent about perfomance related bonuses, after all, hargreaves lansdowne could have had a commission/fee split agreement with their owners, managers and staff – under new speak, any commission element of that would have been evil.

    I am sorry that it is the righteous IFAho has been first hit by this challenge, but if we are to have customer agrred remuneration lets also have customer agreed bonuses, bank staff, fund managers and staff, and who else ?

    one nomination each, mine is the FSA – but who is the customer

  2. Alastair, reference your question as to who is the ‘customer’ of the FSA.
    There are only two possibilities, the FSA having denied that they are an arm of Govt. or the Treasury.

    1) The general public who’s interests the FSA claim in an undefined, hazy and fuzzy kind of way that they serve. Their primary role is however as regulator, being the overseer of firms and markets, their objective being orderly and stable financial firms and markets and in which they have conspicuously failed on all fronts.

    2) The regulated firms who, the FSA maintain, benefit from regulation.

    On point one the FSA has no contract with and are not paid by the public. Turning their claim to be ‘independent of Government’ round they cannot even claim any sort of general mandate. Following down this route indeed begs the question, ‘To whom are they answerable? In any event their ‘consumer protection’ role is by their own admission an ongoing development of the FSA’s original objectives and is typical of poorly controlled bureaucracies tendencies to be ever expanding or in other parlance ‘mission creep’.

    On point two there is, at the very least, an implied contract between regulated firms and the FSA, we pay fees, the FSA provides the regulation.
    In support of this the FSA have always claimed, when explaining or defending their fees structure, that they charge firms because it is they who are ‘beneficiaries’ of their regulation. They have therefore confirmed this contractual relationship by claiming to deliver regulation for the payment of fees.
    As an aside I would like to know the reason why they have, expensive offices in Canary Wharfe, highly paid personnel, excellent pensions and other benefits and a bonus structure that paid out even when the whole financial system, of which they are the regulator and overseer, failed and had to be bailed out by Great Britain Plc. Oh and by the way why do they need a £200m O/D facility? They are now suggesting that that SME’s, presumably mainly IFA’s and Brokers, may have their fees slashed in future, is this the reason for the facility? Looks like they are playing politics, trying to save their unaccountable, cushy jobs!

  3. I deal with Hargraves and Lansdown. Allthis should be reported to us share holders, so we can feel we trust them. My money is little and I need to make every penny not pounds count. I am prepared to take some risks, but not at the cost of Top Knobs filling their pockets with my pittance while I am taking the risks. Im reconsidering my future involment.

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