Halfords, the car carts and bicycle retailer, faces opposition to the reappointment of Big Four firm KPMG as auditor over concerns about independence.
PIRC, the shareholder advisors, said investors should oppose KPMG at the Halfords AGM on 26 July. Non-audit fees for KPMG amount to 63.83% of audit pay, said PIRC. There are also concerns over the frequency at which the auditor is changed.
PIRC said: “This level of non-audit fees raises major concerns about the independence of the statutory auditor. Furthermore, the current auditor has been in place for more than five years. There are concerns that failure to regularly rotate the audit firm can compromise the independence of the auditor.”
The advisory body also said that shareholders should oppose the company’s remuneration policy because of pay levels under a long-term incentive plan (LTIP).
Halfords has cut potential “opportunity” under the performance share plan from 225% for executives to 200%. However, PIRC remains concerned at the overall “opportunity” under the LTIP, which is calculated at 350% of salary, a figure the advisor describes as “excessive”.
“However, concerns remain over the overall remuneration structure,” continued PIRC. “The LTIP is not appropriately linked to non-financial measures and its performance conditions do not operate interdependently. Dividend equivalents are paid on vested shares under the LTIP, which is not appropriate.
“In line with market best practice, dividend payments must warrant subscription to the share capital of the company.”