Business

Pearson: two-thirds of shareholders reject pay package

John Fallon Image copyright Pearson
Image caption John Fallon's 2016 pay package rose by 20%

Two-thirds of shareholders in education publisher Pearson have rejected the company's remuneration report.

The vote - which is non-binding - followed news that the chief executive's pay last year rose 20% despite the firm making a record loss.

John Fallon made £1.5m in 2016, including a £343,000 bonus.

Pearson, whose share price has tumbled since last summer, said it was disappointed at the outcome of the vote.

"We acknowledge our shareholders' feedback and will continue to engage with them to ensure our approach to remuneration reflects the best long term interests of the company," it said in a statement

Ahead of the vote at Friday's annual general meeting, Pearson announced that Mr Fallon had invested his full, post-tax bonus back into Pearson shares.

In addition, chief financial officer Coram Williams had bought 5,000 shares and chairmen Sidney Taurel 20,000 shares through Pearson's secondary listing on the New York Stock Exchange, the company said.

Pearson said the move was a sign that the directors were "fully aligned with the long term growth prospects" of the group.

Mr Fallon received his bonus because Pearson met its operating profit target of £630m, although it made a £2.6bn pre-tax loss after writing down its US assets.

Pearson, the former owner of the Financial Times, said Mr Fallon's basic salary was frozen and would remain so in 2017.

News of the pay award had drawn criticism from the Institute of Directors and a high pay campaign group.

Long-suffering investors have seen Pearson's share price sink amid profit warnings about the health of its operation in the US.

However, the shares bounced 12.4% on Friday after Pearson announced plans to cut costs by £300m a year by the end of 2019.

The company also launched a "strategic review" of its troubled US school publishing business.

Pearson has already announced that it is in discussions with its joint venture partner Bertelsmann to sell its 47% stake in book publisher Penguin Random House.

Meanwhile, 27% of investors in Man Group, the world's biggest listed hedge fund, rejected its 2016 remuneration report.

However, Man said it had been talking to its biggest shareholders and had made "material changes to the implementation of its remuneration policy" and that it was clear a number of its shareholders acknowledged the "positive steps taken to address previous concerns".

As a result, it added, fewer investors had rejected the latest remuneration report.

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