Last year Reckitt proved vulnerable to a cyber attack and like-for-like revenues and profits were flat. So is this an example of executive pay being “ratcheted up so high that it is impossible to see a credible link between remuneration and performance”? That’s how Iain Wright, who chairs the government’s Business, Energy and Industrial Strategy select committee, described high pay last year.
In fact, the pedestrian underlying results wereenough to lose Mr Kapoor his annual bonus. What drove 90 per cent of Mr Kapoor’s payout was his leadership of a team that had increased Reckitt’s shareholder value by about £8bn since 2015. The compound growth of Reckitt’s adjusted earnings per share (EPS) averaged 11.5 per cent a year, comfortably above both Reckitt’s peer group and Mr Kapoor’s upper target of 10 per cent. Under his long-term ‘incentive’ plan (LTIP) award of 2015, this entitled him to receive 240,000 shares and exercise an option over 400,000 more.