Aryzta shareholders urged to reject pay report over lack of ‘transparency’

Investor advisory group raises concerns over bonus scheme for executives

Gary McGann and Kevin Toland of Aryzta at a company agm in Dublin. Photograph: Alan Betson

Gary McGann and Kevin Toland of Aryzta at a company agm in Dublin. Photograph: Alan Betson


Investor advisory group Glass Lewis has called on shareholders of the Swiss-Irish bakery group Aryzta to reject its compensation report at its agm later this month over a lack of “transparency”.

Glass Lewis has raised concerns that a bonus scheme for regional executives rewards them for simply doing their expected job. It also complains about a short-term bonus of 941,000 Swiss Francs (€855,000) that was paid last year to chief executive Kevin Toland.

The company, chaired by former Smurfit Kappa executive Gary McGann, has endured a torrid couple of years after difficulties in the US market caused a collapse in its share price that predated the arrival of the chief executive.

Mr Toland, the former chief executive of the Dublin airport owner DAA, who was parachuted in two years ago to lead a turnaround plan, was paid a total last year of 4.5 million Swiss Francs.


Under a short-term bonus plan for executives, which isn’t linked to share price performance, Mr Toland’s payout for 2019 was 98 per cent of what was possible. Glass Lewis said the scale of the payout may not fully reflect shareholders’ experience for the past fiscal year, when the share price fell significantly”.

The advisory group noted that in late 2018, the company issued a press release stating its target earnings margins of between 12 per cent and 14 per cent. But, it said, the full-year margin delivered was more like 9.1 per cent.

“We believe shareholders could reasonably expect more detailed disclosure of the [earnings] and cash flow targets employed under the short-term incentive plan,” said Glass Lewis, as it justified calling for a vote against the report.

Bonus scheme

The bonus scheme for its regional heads is supposed to reward them for delivering Project Renew, a three-year cost-cutting plan to save €200 million. The annual targets of the bonus plan were not disclosed to shareholders.

“Glass Lewis is sceptical of any type of extra annual bonus that rewards individuals for actions that we view as intrinsic to an executive’s duties, such as... in this case, lead the successful implementation of a new efficiency plan,” it said.

“We acknowledge that the company finds itself in a delicate transition period and we recognise the potential necessity of retention tools,” said Glass Lewis. However, it highlighted that bonuses had been paid out in prior years when targets had not been met.

ISS, another investor advisory group, did not advise shareholders to vote against the compensation report. It did, however, raise a “high concern” that Mr Toland’s pay packet is 1.3 times the median average of Aryzta’s peer companies, which include Glanbia, Kerry Group and Greencore.

The company did not make any comment last night.