Plus500 experiences some AGM turbulence over senior bonuses

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Israeli based and London listed CFD trading platform, Plus500 experienced some turbulence at its recent AGM.

What happened at the AGM? Plus500 held its AGM or Annual General Meeting on Tuesday, and the group provided investors with a trading update ahead of the meeting.

The statement was upbeat, with management saying that the firm was continuing to perform very well against its key metrics, in the financial year 2022.

What’s more, the company said it has made further substantial progress in meeting its strategic priorities, by developing new technology and expanding into new geographies.

The board also noted that it had announced a total of $105.0 million of share buybacks.

Something which it said tallied with the preferences of the group’s major shareholders, with whom the company regularly engages.

What were shareholders unhappy with? However, the goodwill of the shareholders didn’t extend to the approval of the firm’s remuneration report. And 55.0% of shareholders voted against the proposals, contained within it.

The shareholder revolt was led by Institutional Shareholder Services or ISS, one of the world’s largest shareholder advisory groups.

ISS said that proposed bonuses at Plus500 would reward senior staff without appropriate performance targets being put in place.

ISS noted that:

“Concerns have been identified regarding whether performance targets, under the annual bonus, which paid out at maximum for the year under review, were suitably stretching,”

ISS also pointed out, that in its opinion:

“There is scope for more robust disclosures around the target-setting methodology of the variable incentives.”

Were Plus500 shareholders right to vote against the proposed bonus schemes?

One way to make a judgement on that would be to compare the share price performance of Plus500 versus its main competitors, IG Group and CMC Markets.

And to make that comparison over the last two years or so.

If we look back to the beginning of March 2020, we find that in that period, CMC Markets (CMCX) stock has risen by +85.22%, whilst IG Group (IGG) has seen its shares rise by just +14.39%.

Plus500s’ share price has appreciated by +61.30% during those 25 months, which of course included the pandemic and associated lockdowns.

A good performance then, but not a market-leading one.

However, if we look at the relative share price performance between the three companies, over the last 12 months, then it’s a rather different story.

Plus500s’ stock is up by +6.62% in the last year, IG Groups’ share price was down by -13.57%, and CMC Markets’ stock fell by -39.55%.

Over the year to date, there is nothing between Plus500 and CMC Markets, the shares of both businesses being up by just under +10.00%.

IG Groups’ stock, on the other hand, has fallen by -5.86% in 2022.

Using this data it seems that there is a case for rewarding Plus500’s management team. That said it also seems appropriate to have clearly defined performance targets in place, and for those targets not to be, too easily obtainable.

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