E-Malt.com News article: Belgium: Institutional Shareholder Services Inc. criticizes AB InBev’s executive compensation plan and board composition

A leading adviser to large investment firms criticized the executive compensation plan and board composition of Anheuser Busch InBev SA, Chairman Kees Storm said April 30, in a rare challenge to the corporate-governance practices of the family-controlled brewing company, The Wall Street Journal reports.

The criticism, delivered by Institutional Shareholder Services Inc. in a confidential opinion to shareholders, might have influenced shareholders at the company's annual meeting on April 30 to cast around 13% of their votes against the appointment, or reappointment, of board members representing AB InBev's BUD +0.82% controlling families.

Those board members include the Belgians Alexandre Van Damme and Grégoire de Spoelberch, and the Brazilian billionaires Carlos Alberto Sicupira and Marcel Hermann Telles. AB InBev's board is dominated by a small group of Belgian and Brazilian families who together own a majority of the company's shares, now worth more than $170 billion.

"ISS expressed their concerns," said Mr. Storm at a news conference after the meeting. "That was very open and very obvious. There are people who want more independent directors on the board, it's as simple as that."

ISS didn't respond to a request for comment.

Jorge Paulo Lemann, one of the richest men in Brazil who is also a large shareholder of AB InBev, stepped down from the board, but shareholders approved a replacement: his son, Paulo Alberto Lemann, a private-equity executive.

Mr. Lemann's appointment was opposed by nearly 16% of shareholder votes.

Shareholders also cast 17% of their votes against AB InBev's executive compensation plan.

Chief Executive Carlos Brito earned €1.24 million in base salary last year. He was also awarded 322,521 in stock options in December with an exercise price of €75.15.

The company's shares traded at €78.22 late on April 30. Those options vest in five years.

Aggressive and savvy deal-making has propelled AB InBev's controlling families into the stratosphere of global wealth. InBev bought Anheuser in 2008, using mostly debt, leaving the families in control of AB InBev. Then Mr. Brito and his team shaved more than $2 billion in annual costs from the company, helping the deal pay for itself.

Last year, the company bought the half of Mexican brewer Grupo Modelo that it didn't already own, in a deal valued at $20 billion. The company is again planning to use cost-cutting to help pay for the deal. The Belgian and Brazilian families will remain in control.

While AB InBev's executives have been the target of criticism in Belgium because of huge pay packages given to them following the successful merger with Anheuser, many of the company's shareholders don't seem to mind. Profits have soared, and the company's share price has quadrupled since the Anheuser deal was closed. Only a few dozen showed up at the meeting, which lasted about an hour, a contrast with shareholder meetings of other multinational corporations.

"Brito's a good manager," said Herwig Louage, who has been a shareholder since 2008, during a buffet lunch following the meeting. "He's very disciplined."


02 May, 2014