Gemfields, the owner of luxury brand Fabergé, is currently under the threat of a shareholder revolt due to its bonus scheme. Investors are expressing their dissatisfaction with the lack of transparency and information surrounding the executive bonuses at the company. Gemfields, which is listed on London’s AIM market and in Johannesburg, is expected to face a backlash during its upcoming annual meeting.

Advisory group Glass Lewis, renowned for instigating potential shareholder revolts, has criticized Gemfields’ share option plan for its lack of comprehensive information. This critique is also echoed by fellow advisory group Institutional Shareholder Services (ISS).

Glass Lewis has gone as far as recommending that investors vote against the company’s “forward-looking remuneration policy, backward-looking pay report,” and the re-election of its remuneration committee chair. ISS has similarly urged investors to reject the policy.

Despite taking measures in response to the COVID-19 pandemic, such as implementing salary cuts for executives and suspending bonuses for 2020, Gemfields is still facing frustration from investors regarding its overall approach to pay. Shareholders revolted against the company’s pay policy at the previous annual meeting.

A spokesperson for Gemfields has clarified that the share options offered are legally binding obligations that cannot be unilaterally changed by the company or its remuneration committee.

The discontent among shareholders serves as a clear indication of the growing scrutiny on executive pay and the demand for increased transparency in bonus schemes. As companies navigate through uncertain economic times, it is crucial for them to address these shareholder concerns and develop fair and transparent remuneration policies in order to maintain investor confidence.

Useful links:
1. Executive Pay and Performance Reporting Guidelines: This link provides guidance from the UK government on reporting executive pay and performance.
2. Shareholder Activism: Everything You Need to Know: This Financial Times article provides an overview of shareholder activism and its implications for companies.