Shareholders left fuming over Tobacco chief’s new £10m pay plan

British American Tobacco, The FTSE 100 giant behind Benson & Hedges, has angered its key investors by proposing performance-connected share awards for its chief executive, Nicandro Durante.

The tobacco giant behind Lucky Strike, Pall Mall, and many other UK cigarette brands, has been bombarded by a shareholder revolt over a controversial new pay plan that could potentially see its boss take home £10 million.

The performance-related share awards scheme proposed for Durante would be worth, at maximum, up to five times his standard salary, with an additional bonus valued at as much as two-and-a-half times his base pay if specific targets are met. Back in 2014, the chief executive’s salary already approached £1.2 million.

The BAT boss’s long-term incentive plan (LTIP) is, at present, limited to a maximum of four times his salary, with his annual bonus capped at two times.

One top ten investor said: “I don’t think it’s necessary to keep pushing these levels…  They’re just not underpaid, and this is a relatively simple business to run.”

British American Tobacco are also seeking approval to boost the pay package of its finance director, Ben Stevens.

Shareholders have revealed that they also rejected an even bigger package for Mr Durante last year, when BAT’s remuneration committee tried to secure an LTIP six times his salary, a level described by one investor as “ludicrous”. There was additional anger over Durante’s bonus in 2012, which came in just a year after he was appointed chief executive.

BAT’s results have been hit by steep falls in emerging market currencies, with pre-tax profits down 16.4% to £4.8 billion in 2014, and revenues falling 8.4% to £13.97 billion.

The awards that company executives have netted from their income-linked LTIPs have fallen due to the foreign exchange hit. Mr Durante received £3.6 million in total in 2014, including a salary, pension, bonus, and other benefits, down from £6.7 million in 2013.

The company now plans to alter the terms of its latest awards so that they are based on BAT’s performance on a constant currency basis – effectively removing the impact of foreign exchange – in a bid that has left investors fuming.

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