Pearson shareholders see red over chief executive's 20% pay rise
Pearson shareholders have vented their anger over a 20% pay bump for the loss-making publisher's chief executive, with over two thirds voting against the company's remuneration report.
The company said it was "disappointed" that the report failed to gain shareholder approval, with more than 65.59% votes cast against the resolution at its AGM.
It comes after the former Financial Times and Economist owner boosted chief executive John Fallon's base salary from £776,000 to £780,000, and shelled out an extra £343,000 for his annual incentive plan, helping his total pay climb to £1.5 million - while the publisher posted its biggest lost in its history.
Pearson said: "During 2016, Pearson engaged extensively with its major shareholders to understand their views on remuneration matters.
"We were disappointed that the advisory vote for this year's remuneration report was not passed and that, although passed, there was a significant minority vote against both our remuneration policy and the re-election of our remuneration committee chair, Elizabeth Corley.
"Naturally, we acknowledge this feedback and thank those shareholders who have already spoken with us and explained their reasons for not supporting the relevant resolutions."
The company said that the remuneration committee was "committed to continuing dialogue" with shareholders as it applies its remuneration policy in the years ahead.
The shareholder vote against the remuneration report - which looks back at the way that the company's pay policy has been applied over the past - is advisory, while votes cast for the policy - which outlines the way the company intends to reward its executives over the next three years - is binding, and was passed by shareholders at Friday's AGM.
News that Pearson is set to embark on major cost cutting plans sent its FTSE 100 listed shares up more than 11% on Friday.
The company said it will slash costs by £300 million a year by the end of 2019, and had started a "strategic review" of its US school publishing business.
It adds to the £650 million of previously announced savings over the past four years, with the efficiency drive leading to the loss of 4,000 full-time staff across the business last year.
Chief executive John Fallon said: "We are creating a leaner Pearson, equipped to innovate and win in digital education.
"The measures we are announcing today build on the work completed last year and will allow us to further simplify our portfolio, reduce costs and accelerate our digital transformation."
The news came as the group announced results for the first quarter of 2017, with sales increasing by 6% in underlying terms, in line with expectations.
Pearson maintained its full-year operating profit guidance of £570 million to £630 million.