Whitbread’s shareholders had their rage on this week, which was something of a startling moment for boring, boring Whitbread, where the goals are long term and the watchword is caution.
But while the company may be happy not to let its cash burn a hole in its pocket and take a slowly-slowly approach to investing – no matter what this does to the credibility of its Germany plan – it’s not backwards in paying its executives.
And fair enough, you’d think. People should get paid. This is not a barter society, although here at NewDog PR we’d be interested in hearing what you’d trade for a Premier Inn room. And the answer isn’t ‘a good night’s sleep’, because that’s just mean.
Back at Whitbread, Sky News reported that IVIS, one of the City’s most influential voting services, had red-topped Whitbread’s remuneration report – meaning that it was very pissy about it indeed.
Driving this ire was Whitbread’s decision to carry over executive bonuses accrued during the pandemic, despite many job cuts and use of state funds to furlough employees.
IVIS, which is run by the Investment Association, told investors that they “will have to be satisfied that it is appropriate given the company’s financial performance and the impact of the COVID-19 pandemic – the company used the government help, raised capital and suspended dividend payments”.
Whitbread decided that CEO Alison Brittain and her senior colleagues had earned part of her annual bonus entitlement for 2020/21, but the remuneration committee decided not to pay them this year but delay them by 12 months depending upon its performance.
The vote on how irritated this made the shareholders came the same day that the group reported its Q1 results and there was much to like. There were very strong forward booking trends in tourist locations throughout the summer, and improved forward bookings across the majority of the rest of the estate, with the exception of airport locations and central London. The group can count on 15% of its hotels being near a beach and we’ve all seen the perky rates that can engender.
Brittain said: “We hold a uniquely advantaged position in the UK, built on our scale, market-leading direct distribution, and strength of the Premier Inn brand. Our position as the market leader in the fast-recovering budget sector is combined with a broad, domestic focussed customer mix.
“Our forward bookings continue to improve, benefiting from the anticipated post-lockdown bounce in leisure demand, and a continued gradual improvement in business bookings.”
The shares rose 4% on the news. So, you would think, would shareholder happiness.
But there’s nothing liked a shared trauma such as a pandemic to push people’s fairness buttons and human nature, lovely as it is, can err on the side of everyone needing to suffer the same amount.
The hotel sector is no different and, given the number of participants in the hotel stack, there are a lot of voices who need to see that everyone is suffering just the same as they are. Since the first lockdown, eyes were on where the pain hit hardest. The brands lost fees, but was that as bad as the owners losing all income, but then what about reputation and what about the lenders and what about. The UK government has just kicked the can down the road on outstanding rents, but therein lies a hotbed of fairness issues.
Back at Whitbread, it can’t have been fun running Premier Inn during a pandemic and one feels for Brittain and her team. It wouldn’t be a leap to think that bonuses should be linked to toiling in such awful circumstances. But payment isn’t linked to suffering in the current market, as the NHS will tell you. It’s all about performance and through no fault of Brittain’s, it has not been a strong year.
That must feel pretty unfair. But as this all shakes out, quite a few parties are doomed to feel hard done by. Something to consider when contracts are next being drawn up.