ISS gives Kingspan CEO ‘qualified support’ ahead of Grenfell report

Kingspan chief executive Gene Murtagh has received “qualified support” from a leading advisory firm to shareholders for his re-election at the company’s upcoming annual general meeting (AGM), pending the publication of a final report on an inquiry into the Grenfell Tower fire in London that killed 72 people in 2017.

The Cavan-based group’s K15 insulation board was used on about 5 per cent of the insulation layer of external cladding of the block, unknown to the company.

However, in late 2020 an inquiry set up by the UK government into the disaster uncovered emails from Kingspan UK staff dating back to 2009 that joked about the fact that fire safety tests on K15 were flawed. The company maintains that tests on K15 have since been repeated and provided evidence to support the original safety claims for the product.

Institutional Shareholder Services (ISS), which advises large investors on how to vote at AGMs, noted that its qualified support for the chief executive’s re-election “reflects concern at the information that has come to light at the Grenfell inquiry and recognises reputational damage”.

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“However, it also acknowledges that remedial action has been taken, including a suite of reforms” in the past two years, it added, noting that these range from a new code of conduct and compliance function to a revised whistleblower policy and staff changes.

ISS said that the matter will be revisited, including implications for re-electing directors, when the final report on the disaster is published. That is not due until at least October of this year.

The move to give qualified backing to Mr Murtagh marks a change from the last two AGMs, when ISS called on clients to abstain from his re-election. Between 20.5 per cent and 21.9 per cent of those voting generally on AGM resolutions in the past two meetings either decided to ballot against the CEO or abstained on the motion.

[ Public safety ‘continues to be threatened’ by Kingspan - UK minister ]

Another major proxy advisory firm, Glass Lewis, has given unqualified support to Mr Murtagh, whose total remuneration fell to €2.9 million last year from €5.73 million in 2021.

UK housing secretary Michael Gove wrote to Mr Murtagh last month and invited him to meet his officials to discuss remediation payments.

A company spokesman said at the time that Kingspan continues to stand by its commitment to “pay our share of remediation costs where we have responsibility for the inappropriate use of K15 in a high-rise residential building, and its safe retention cannot be supported by testing” as well as contributing to “an appropriate joint government and industrywide funding mechanism such as an industry levy”.

Glass Lewis said that it will “continue to monitor this issue going forward”.

The Irish insulation giant reported in February that its revenue grew by 28 per cent to €8.3 billion and trading profits increased by 10 per cent to €833.2 million, despite “bumpy” economic conditions.

“This was achieved at a time of exceptional inflation and unprecedented disruption in supply chains globally, which was less a feature in the latter part of the year,” the company said.

While shares in Kingspan have rallied 13 per cent so far this year, they remain down about a third over the past 12 months.