Brent Cross-owner faces‎ AGM pay revolt

The commercial property group which owns London's Brent Cross shopping centre is facing a bruising shareholder revolt this month over multi-million pound share awards to top executives.

Sky News has learnt that leading City investors are preparing to vote against Hammerson's remuneration report at its annual meeting on April 30 following its dismal financial performance last year.

A number of institutional shareholders plan to follow a recommendation by ISS, a proxy adviser, which has warned that Hammerson's board failed to take into account its weak share price when allocating share-based awards to chief executive David Atkins and senior colleagues.

ISS has also criticised the retail landlord for what it deems excessive vesting of long-term share awards in 2018, as well as bonuses paid to two departing executive directors despite Hammerson reporting an operating loss of £142m.

A large-scale revolt at the AGM would heap pressure on chairman David Tyler, who has already been forced into a peace deal with the activist investor Elliott Advisors.

Under an agreement struck in February, Hammerson intends to appoint two new non-executives who have Elliott's approval.

In exchange for that move and the formation of a new disposals committee to enhance value from asset sales, Elliott has agreed to support resolutions, including the one covering pay, at the AGM.

Elliott, which holds a stake of more than 5% in the FTSE-250 commercial property group, had been preparing to nominate a slate of directors to join the company's board prior to the deal it struck with Mr Tyler.

The compromise averted the prospect of Elliott adopting a more aggressive approach by tabling resolutions relating to the election of new board members before Hammerson's annual meeting in April.

The ISS recommendation to oppose Hammerson's remuneration report comes at a time of continuing scrutiny of boardroom pay, and is unlikely to appease critics who argue that there is an insufficient link between lavish rewards and corporate performance.

With a market value of £2.5bn, the company is one of Britain's biggest shopping centre owners, counting Birmingham's Bullring and a stake in Bicester Village among its assets.

A year ago, Mr Tyler and his colleagues rejected a cash-and-paper offer from Klepierre, a French company, worth 635p-a-share, arguing that it significantly undervalued Hammerson.

At around the same time, Hammerson - shares in which are now trading at around 329p - abandoned a planned merger with rival Intu Properties.

Hammerson suspended a £300m share buyback in January, having completed just under half of a programme that was announced alongside a plan to sell £1.1bn of assets by the end of 2019.

Investors are keen for the company to take more decisive action, including the disposal of a more substantial portfolio of non-core assets, despite the difficult commercial property market.

A Hammerson spokeswoman said the remuneration report was the only resolution ISS had opposed, while Glass Lewis, another proxy advisor, had recommended supporting it.

"The CEO and CFO elected not to take a bonus for 2018 in recognition of the challenging year the business experienced and we believe we are the only FTSE-350 real estate company to have taken this position.

"The remuneration committee is already reviewing the remuneration policy and will be putting a new policy to shareholders at the AGM in 2020."

Intu, which owns the Trafford Centre in Manchester, has also reported a sharp writedown in the value of its asset portfolio, and announced the appointment of a new chief executive.

Elliott has earned a reputation as one of the world's most aggressive activists, acquiring stakes in companies such as Hyundai Motor, Micro Focus, the software maker, and Pernod-Ricard, the French drinks producer.

Elliott could not be reached for comment.