Hibernia Reit backers’ deal almost doubles to €40m on stock bonuses

Property firm faces possible shareholder revolt over chiefs’ pay plan

Hibernia Reit is planning a 50% increase in basic pay for chief executive Kevin Nowlan for the current financial year, to €450,000. Photograph: Tom Honan

Hibernia Reit is planning a 50% increase in basic pay for chief executive Kevin Nowlan for the current financial year, to €450,000. Photograph: Tom Honan

 

Four founders of Hibernia Reit have shared in a total €39.9 million pot of stock and cash resulting from the company’s move in November 2015 to “internalise” management of the company, which floated on the stock exchange in late 2013.

That is 90 per cent more than the initial €21.1 million value of the transaction, which also involved three staff of a company associated with the real-estate trust’s launch.*

The four individuals have received €6.5 million worth of stock in the property company in the past week to meet a bonus payment tied to a deal in 2015 to move management of its assets internally.

The instalment brings to €18.8 million the amount of stock the directors and company advisers – led by chief executive Kevin Nowlan – have received in the past three years as “deferred consideration” relating to the transaction.

The final payment comes as Hibernia Reit faces the prospect of a number of shareholders voting against a directors’ remuneration report at the company’s annual general meeting (agm) next Tuesday. Two influential proxy advisory firms that advise large investors on corporate governance issues – Institutional Shareholder Services (ISS) and Glass Lewis – have recommended that their clients register their objection to planned pay increases for top executives.

Hibernia Reit is planning a 50 per cent increase in basic pay for Mr Nowlan for the current financial year, to €450,000, while it has proposed a 28 per cent increase in chief financial officer Thomas Edwards-Moss’s salary, to €340,000. The outcome of the shareholder vote is not binding.

‘Severe reservations’

ISS said the rationale for the salary increases “is not considered to be sufficiently compelling”, while Glass Lewis said it had “severe reservations” about the proposal.

Following the final payment of deferred payments tied to the internalisation deal, Hibernia Reit now plans to set up an incentive scheme for Mr Nowlan, entitling him to short-term annual bonus awards of up to 150 per cent of annual salary and long-term incentives of as much as 200 per cent of basic pay. ISS and Glass Lewis support this arrangement.

Having raised almost €5.13 million earlier this year from the sale of 3.4 million Hibernia Reit shares on the market, Mr Nowlan now owns 6.8 million shares – or a 0.97 per cent stake – in the company, valued at €9.86 million.

His father, William Nowlan, a senior adviser to Hibernia Reit, owns 0.73 per cent following the latest deferred stock payment. Fellow members of the management team that participated in the “internalisation” deal, chief operating officer Frank O’Neill and senior adviser Frank Kenny, own 0.31 per cent and 0.97 respectively.

Meanwhile, non-executive director Colm Barrington described as “nonsense” calls by ISS and Glass Lewis for investors to vote against his re-election at the agm next week, according to a Sunday Business Post report over the weekend. The proxy advisory firms are concerned about the number of board positions he holds elsewhere.

“When you work 40-hour weeks like most people do, perhaps that would be too demanding, but I work 24/7; that’s what I am used to,” he told the newspaper. “I don’t feel I am overstretched.” *Clarifies in second paragraph that three other individuals shared in the proceeds of the internalisation deal