Glanbia leadership pay drops almost as much as share price

The issue of CEO pay is back again as Ireland’s main listed companies – of interest to farmers – publish their annual reports. Last week we noted that FBD CEO Tomás Ó Midheach’s total remuneration had topped €2m.

But he still has some way to go to catch up with Hugh McGuire, CEO head of Glanbia, whose 2024 remuneration topped €4.2m.

Mark Garvey, Chief Financial Officer of Glanbia saw his total pay drop from €3.9m in 2023 to €2.9m in 2024. His 2023 salary was elevated by a once-off retention bonus which saw him receive an extra full year’s salary, paid in Glanbia shares, should he stay with the company until the end of 2025.

However, the total remuneration paid to the CEO and CFO in 2024 at Glanbia at €7.1m was very far below the combined pay of the CFO and outgoing CEO Siobhan Talbot in 2023, which ran to €11.5m.

The calculation of the 2024 total ignores the €1.14m paid to Talbot during the year as part of a non-compete clause for the CEO who retired in December 2023.

While shareholders expressed displeasure at some aspects of the director remuneration at last year’s AGM, their disapproval may have been somewhat sated by the fact that Glanbia’s shares were trading close to €18 each at the time.

Fast forward to this week and Glanbia’s shares are closer to €10, a more than 40% drop from the peak seen in early June last year.

The almost 40% drop in management pay since last year is unlikely to give them much comfort when they meet at the Killashee Hotel on April 30.

In his review of the year, McGuire said that Glanbia delivered “a strong performance in 2024”.

However, he also highlighted the challenges the company is already facing in 2025, including what he called “unprecedented whey protein market dynamics” which he expects to be transitory.

Those whey protein market dynamics – a management euphemism for whey prices being a lot higher than forecast – were one of the main surprises for investors when the 2024 financial results were announced in February.

There was also the non-cash impairment charge of $91.4m (€83.5m) relating to the SlimFast brand which Glanbia has finally decided to put up for sale after several years of disappointing performance and an exceptional charge of $46m (€42m) relating to the decision to exit the Body&Fit business in Europe.

Those adjustments meant that profit after tax at the company dropped by more than 50% to $164.7m (€150.5m).

As we have previously covered on these pages, the investor reaction to that financial performance was fast and severe (see Figure 1).

What may be worrying for Glanbia is that there has been no rebound in its share price from that plunge. This is despite the company spending more than €12m buying back its own shares in the three weeks since the disastrous report was published.

Gaynor set to retire

Donard Gaynor, chair of Glanbia, said that he will retire as chair and from the board of Glanbia following next year’s AGM. He has been on the board since 2013 and chair since 2020. Last year he was paid €360,000.

The basic fee paid to each non-executive director of the company was €97,000, with extra fees earned from committee roles.

In the annual report Glanbia highlights that the risks it faces from geopolitical, economic and market factors are all trending higher.

It lists the key risks as headwinds from tariffs, key ingredient pricing, and rapid changes in consumer behaviour. Other than the ingredient pricing, those risks are common to all global, consumer-facing businesses.

The ingredient pricing – a reference to whey costs – was a surprise for investors as Glanbia is both a large producer and consumer of whey.

Whey is produced at Glanbia’s US cheese plants and whey is consumed by the company’s Optimum Nutrition brand.

According to the company’s website, the decision to purchase Optimum Nutrition in 2008 was to “vertically integrate” its whey supply business with one of its customers in the sports nutrition market.

The vertical integration means that Glanbia, in theory, controlled the whey from production at the cheese plants all the way through to the finished product at the consumer end. That is where the logic for the deal arose.

Up until this year it has been a hugely successful vertical integration.

For this company to tell investors this year that it has been caught on the wrong side of whey prices does seem like a lot for investors to swallow.

The idea of a vertical integration is to de-risk the supply chain – a failure to control or manage those costs does seem like a failure for which management at Glanbia has to take responsibility.

In short