LONDON, March 28 (Reuters) - Reckitt Benckiser’s chief executive Rakesh Kapoor got an 18 percent pay cut in 2017, his second in two years, due to a halving of his long-term incentive benefits, after a year of underperformance at the British consumer goods company.
The maker of Durex condoms and Lysol cleaners said on Wednesday Kapoor received total compensation of 12.5 million pounds ($17.7 million) in 2017, down from 15.3 million in 2016. Without the reduction in his long-term incentive plan (LTIP), Kapoor’s 2017 compensation would have been 23.7 million pounds.
Kapoor’s 2016 package had been slashed by a third, after a damaging safety scandal in South Korea, following a measure of investor dissatisfaction with 2015 compensation of 25.5 million pounds that made him Britain’s third-highest paid boss. That package was rejected by 18 percent of voting shareholders.
The reduction in the 2017 LTIP, which accounts for the biggest portion of compensation, was volunteered by Kapoor and exercised by the board “based on the committee’s evaluation of performance in the round and alignment of pay outcomes with the shareholder experience,” the company said.
“We recognized that 2017 was a challenging year,” said Mary Harris, chair of the remuneration committee.
For years, Reckitt enjoyed a reputation as a pace-setter of growth in the consumer goods industry. But sales growth evaporated last year, due to a slowdown in its core consumer health business and pressure on pricing, as well as a series of one-time items including a cyber attack, a failed product launch and the scandal in South Korea.
Reckitt’s shares ended 2017 roughly in line with where they started it, despite rising to a record high in June, the same month the company closed its $17 billion takeover of baby formula maker Mead Johnson. They have lost more than a quarter of their value so far this year, even after a rally last week.
At 12.5 million pounds, Kapoor is still likely to be at the upper end of the British CEO pay scale. According to the High Pay Centre think tank, the average CEO pay at a FTSE 100 company was 4.5 million pounds ($6.4 million) in 2016. Figures for 2017 have not yet been calculated.
Reckitt’s market capitalization is 59 billion pounds ($83.6 billion), making it the 15th biggest company in the blue-chip FTSE 100 index.
$1 = 0.7058 pounds Reporting by Martinne Geller; Editing by Mark Potter