Swiss-Irish food group Aryzta has withheld the performance-related bonus of its chief executive, Owen Killian, amid ongoing concern over its troubled US arm.
The global bakery giant has been struggling to halt a slide in investor confidence over the past year linked to the loss of contracts in the US and the acquisition of a 49 per cent stake in frozen-food company Picard.
Last week, it reported another decline in full-year profits, blaming the further contract losses in North America, where it supplies fast food chains McDonalds and Subway with a range of par-baked products.
In its annual report, published today, the company said the performance-related bonus earned by Mr Killian had been withheld “pending the resumption of growth in underlying fully diluted earnings per share”. The report reveals Mr Killian received a basic salary of €1.27 million in 2016 plus an additional €275,000 in benefits and pension entitlements.
However, the €958,000 he would have received as a performance-related bonus was withheld.
In a letter to shareholders, outgoing chairman Denis Lucey said the decline in full-year earnings reflected an increased investment in brand marketing, primarily in North America, where the company's Otis Spunkmeyer and La Brea ranges were extended.
“The remainder of the margin decline related to the negative operating leverage from the long-term contract renewals,” he said.
Results
While these revenue losses adversely impacted the company’s full-year results, the successful finalisation of new long-term contracts brings revenue stability and a solid foundation for future growth, he said.
The company recently announced the appointment of Gary McCann as its new chairman.
Aryzta’s shares were trading marginally up at €40 in Dublin this morning following news of Mr Killian’s withheld bonus.
In the past 18 months, the company’s shares have shed up to 50 per cent of their value, dropping from a high of €72 in March 2015.
Apart from the underperformance of the its US arm, investors are also unhappy with the group's recent acquisition of a 49 per cent stake in Picard for €446 million, which was funded through the disposal of its stake in agricultural services group Origin, and which the market viewed as expensive.
Mr Killian added fuel to the fire by selling nearly two-thirds of his stake in the company early this year.
