UK Self-Storage Operator Safestore Struggles to Gain Backing for Executive Pay

Update 7/19/17 – A revised remuneration policy for Safestore executives is also in jeopardy of being rejected by shareholders. At least two voting advisory services—Institutional Shareholder Services Inc. and Institutional Voting Information Service (IVIS)—have issued reports criticizing the revised plan for providing excessive compensation, according to the source. Safestore officials are expected to hold a special meeting next week to try to gain support from voters.

"Despite a reduction in quantum as compared to the original proposals, the new framework will nonetheless provide a significant (up to 1.6 percent of the issued share capital) reward opportunity to the executive directors, for which the underlying rationale remains not particularly compelling," Institutional Shareholder Services indicated in its report to clients. "In parallel, there is an increase in annual bonus award opportunity. Altogether, the new remuneration policy will significantly enhance the total potential remuneration package."

IVIS rated the proposal as a “red top,” its strongest warning to shareholders. Its assessment raised concerns to the “structure and scale” of prospective compensation, the source reported.

"We have engaged extensively with shareholders, listened to their concerns and revised our proposed remuneration policy accordingly,” Safestore officials said in a released statement. "The new proposed five-year LTIP is structured to reward success, extending beyond the board to the wider management team. The board believes that the policy is right for the company and for all shareholders to continue the success of the last three years.”

3/22/17 – After gathering feedback from shareholders, the board of directors for U.K. self-storage operator Safestore Holdings PLC has withdrawn proposals to adopt a new directors’ remuneration policy and replace the company’s existing Long Term Incentive Plan (LTIP). As proposed, CEO Frederic Vecchioli would have received up to 2.5 million shares after five years, worth £9.4 million by current valuation. Nearly 40 other company leaders would also have received pay bonuses, according to the source.

By withdrawing the resolutions, the existing pay policy, as approved by shareholders in 2014, will remain in place until Oct. 31. The company will then seek approval for a new policy, according to a company press release.

"After an extensive consultation process, which resulted in amendments to and tightening of performance conditions, the board had proposed a new and innovative long-term incentive plan. Its central aim was to incentivize and reward a wider group of executive directors and senior management to drive corporate performance over the next five years,” board chair Alan Lewis said.

“While we have received considerable support from shareholders on the proposed structure, it is clear that for others concerns remain. Under these circumstances, the board considers it appropriate to withdraw the remuneration proposals,” Lewis continued. “The board will continue to engage in dialog with shareholders to find a solution that best meets the needs of all."

The board had previously tightened the proposed bonus plan due to pressure from shareholders, the source reported. Other publicly traded firms in the U.K., including defense manufacturer Chemring Group and tobacco company Imperial Brands PLC, have recently scuttled incentive plans due to dissatisfaction among shareholders.

Safestore operates 134 self-storage facilities, including 109 facilities it owns in the U.K. and 25 in France. Its wholly owned properties comprise more than 5.6 million square feet of storage space, while its entire portfolio serves approximately 55,000 customers.

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