Booking Holdings


The Covid-19 pandemic had a significant impact on executive compensation packages, with targets set prior to the onset of the pandemic often rendered unachievable by the ensuing economic disruption. Attempts by remuneration committees to recalibrate compensation plans to reflect the disruption did not always result in remuneration structures that were appropriate or proportionate. As we detail in our Proxy Voting policy, we typically prefer executive remuneration structures that align the interests of management and directors with long-term shareholders and durable value creation. We also have a strong preference for compensation plans that are clear, robust and proportionate.

Reflecting these preferences, we took the decision to vote against management in the ‘say on pay’ vote on 2021’s executive remuneration package at Booking Holdings’ 2022 AGM. In our view, the structure of the online travel company’s remuneration package was both overly complex and poorly disclosed in places. We also had misgivings about the extent to which the structure aligned with the interests of shareholders, as well as the size of the proposed increase in total compensation. Whilst Booking’s management team had admittedly performed well during the Covid-19 pandemic, we did not believe the proposed increase reflected the total return experienced by shareholders in recent years. The ‘say on pay’ vote failed, receiving only 31.7% of votes for.

Following the AGM and having written to the company explaining the rationale for our vote, we initiated an engagement for change with Booking, encouraging it to put in place a simpler remuneration structure with better disclosure and shareholder alignment. We elaborated further on our thinking in a subsequent meeting with the company, detailing where we thought the business could improve its remuneration practices. This culminated in a meeting in May 2023, where Booking outlined its proposed changes.

Encouragingly, the revised remuneration structure was both simpler and better aligned with the long-term interests of shareholders. Amongst the proposed changes were a better balance between time-based restricted stock units and performance-based units, and a welcome return to three-year targets for performance share units. Also included was a total shareholder return modifier, aimed at better aligning the payout of performance-share units with the experience of shareholders. Given these changes and our positive experience of Bookings’ openness to constructive engagement, we were comfortable supporting management on this issue at the 2023 general meeting.



Proxy voting adviser ISS recommended voting against Compass Group’s remuneration report in advance of the company’s 2023 AGM. The basis for the recommendation was a perceived failure on the part of Compass to address the significant shareholder dissent recorded at the 2022 AGM, when 32.5% voted against the company’s remuneration policy. The dissent was in response to the decision to increase the quantum of the company’s long-term incentive (LTIP) plan, which Compass argued would enhance the motivation and retention of executive talent.

Based on a range of considerations, however, we took the decision to vote in line with management’s recommendation and for the remuneration report. Not only do we not consider executive remuneration at Compass to be excessive (CEO remuneration is positioned at around the median of the company’s comparator group) we noted that the LTIP granted in 2019 lapsed in full due to missed targets, the third successive LTIP to do so. The targets for the 2019 award were set shortly prior to the onset of the Covid-19 pandemic, rendering their achievement unrealistic despite the very strong performance of the business in the circumstances.

In a letter received by us prior to the recommendation from ISS, the Chair of the Remuneration Committee at Compass stated that whilst the best-in-sector performance of the company during the pandemic might have “justified a modest level of vesting”, consideration had been given to “shareholder and proxy agency views as well as the current broader and economic environment”. In our view, this decision not to exercise any positive discretion shows a healthy level of restraint. We also took note of the decision to cap salary increases for executive directors at below 5%, whilst awarding UK employees ~8%.

Universal Music Group


Executive remuneration can be a balancing act. Remuneration committees must ascertain a level of compensation that can recruit, retain and incentivise key executives, whilst being proportionate and aligned with the interests of long-term shareholders. That challenge becomes even more acute when it involves a high-profile, transformative CEO with a deep knowledge of the business and industry that, if lost, would be extremely difficult to replace. Such is the case with Lucian Grainge, CEO of Universal Music Group (UMG).

Since taking the helm in 2010, Mr. Grainge has built UMG into the world’s biggest record label with a roster of artists that reads like a who’s who of popular music. In that time, he has become the industry’s pre-eminent executive. Given Mr. Grainge’s status and track record, it came as little surprise when UMG announced in March that it was extending his contract for another five years. Announcing the deal, UMG’s board emphasised Mr. Grainge’s contribution to the success of the business and the vital role he would play in securing future opportunities and “maximizing shareholder value for the long term”.

Under the terms of extension, UMG moved Mr. Grainge from an all-cash compensation package to one that is a combination of equity and cash. According to UMG, the majority of compensation would be paid in UMG equity and UMG performance-based stock options “to assure the compensation program is aligned with shareholders’ interest”. The new package was made subject to shareholder approval at the company’s AGM in June. From our perspective, we welcomed certain elements of the new compensation package, including a ~two-thirds reduction in base salary and a more appropriate annual bonus structure. Overall, it represents a more sensible and better-aligned long-term structure than its predecessor. However, we were concerned by the inclusion in the long-term incentive plan of a one-time “transition” equity award, which will see Mr. Grainge receive a potential total of US$100 million (50% restricted stock units and 50% performance stock options) should UMG’s share price surpass certain targets by the time his contract ends in May 2028.

Taking all of this into account, we chose to vote against both the remuneration report and the proposal relating to the transition award. As well as viewing the quantum of Mr. Grainge’s pay to be excessive, with an annual incentive structure that was out of line with prevailing market standards, we also opposed the grant of a transition award on top of an already disproportionate pay package.