UK shopping centre landlord Intu is looking to increase potential payouts for top executives, despite a plunge in its share price and a looming emergency fundraising.
The owner of Manchester’s Trafford Centre had cut share-based rewards for the chief executive and chief financial officer for 2019 “to take account of the current share price”.
But it is now talking to shareholders about restoring these payments — which are separate from annual bonuses — to their previous, higher levels, according to a person familiar with the discussions.
Intu’s share price has continued to fall as it struggles with about £4.7bn of debt and a crisis among retailers.
The discussions about the share awards are part of broader pay negotiations, which also include chief executive Matthew Roberts — who was previously CFO — voluntarily reducing the pension contribution he receives from 24 per cent of salary to 10 per cent.
That follows growing investor disquiet about executive pension contributions at listed companies.
Potential rewards under Intu’s performance share plan (PSP), a long-term incentive scheme, have traditionally been based on shares totalling 250 per cent of each executive’s salary, but were cut to 200 per cent for 2019.
Intu is now looking to restore this figure to 250 per cent for 2020, as first reported by the Sunday Times.
After initial conversations with shareholders, Mr Roberts and the current chief financial officer, Robert Allen, have also now agreed to cap individual payouts under the scheme to five times their respective salaries, the person said.
Intu said it was “engaging with all shareholders”, adding that “executive remuneration is set by our remuneration committee”.
Intu’s share price has dropped rapidly in recent years as investors worried about its capacity to cope with its debt burden, especially since property prices began falling fast as retailers struggled with the transition to ecommerce and higher costs.
In 2018, its share price fell 56 per cent to £1.10 and the group scrapped its final dividend. Last year the share price fell another 70 per cent to 32.9p.
The price has since dropped to 12p, or a market capitalisation of £163m, and Intu is seeking to raise fresh equity. Analysts say it needs to raise about £1bn.
The shares hit record lows last week after a Hong Kong investor, Link Real Estate Investment Trust, backed out of taking part in the equity raising.
The latest salaries of Intu’s top executives have not yet been disclosed, but in 2018 David Fischel, then chief executive, was paid a base salary of £615,000 and total pay of £943,000. Mr Roberts, then CFO, received £485,000 base pay and total pay of £719,000.