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Galen G. Weston, Chairman and President of Loblaw Companies Limited waits to appear as witnesses at the Standing Committee on Agriculture and Agri-Food (AGRI) investigating food price inflation in Ottawa, on March 8.Spencer Colby/The Canadian Press

Shareholders of Loblaw Cos. Ltd. L-T overwhelmingly gave their blessing to a pay increase for president Galen Weston at the company’s annual meeting, despite public criticism of the move at a time of high food inflation.

Loblaw said 92 per cent of shareholders voted in favour of a resolution expressing approval for the company’s overall compensation philosophy.

There was never a doubt it would pass – Mr. Weston’s family company, George Weston Ltd., had 52.6 per cent of the votes, owing to its majority ownership of the company. But the 92 per cent in favour – in line with averages for Canadian “say on pay” votes, according to research by Kingsdale Advisors – indicates many other shareholders approved, as well. The numbers suggest that fewer than 20 per cent of non-Weston shareholders voted against the pay proposal.

Mr. Weston received the pay raise as Loblaw has sought to push back against criticism that Canada’s largest grocers have not done enough to tamp down food inflation.

In its proxy statement to shareholders, Loblaw reported Mr. Weston made $8.4-million in 2022, up sharply from $5.4-million in 2021. Much of that increase came because Loblaw took on a greater share of Mr. Weston’s pay at George Weston Ltd. Mr. Weston returned to the president’s job at Loblaw in mid-2021, and Loblaw took on 70 per cent of his pay, versus 40 per cent previously.

However, Mr. Weston’s overall pay, as reported by George Weston Ltd., rose $1.2-million in 2022, bringing his total compensation to $11.79-million, after consultants hired by the company determined that he was underpaid.

That news, originally reported by The Globe and Mail, set off widespread criticism on social media, and led federal NDP Leader Jagmeet Singh to decry Mr. Weston as greedy in a tweet.

No shareholder asked a question about Mr. Weston’s compensation at the online-only meeting Thursday morning. Both Institutional Shareholder Services and Glass Lewis & Co. suggested a “for” vote on the compensation question after examining the structure of the company’s pay plans, the outcomes and the stock performance.

“No significant compensation concerns have been highlighted,” ISS said. Glass Lewis found eight positive features of the compensation program, versus two negative features, relating to goals and metrics in the company’s long-term performance plans.

With Galen Weston leaving as Loblaw CEO, what was his million-dollar pay raise for?

However, one shareholder advocacy group was urging a “no” vote. The Shareholder Association for Research & Education (SHARE) represented an investor concerned with Loblaw’s pay.

“There’s no argument that Loblaw and other grocers in Canada have had strong stock price gains in the last year and have certainly been very profitable,” said Anthony Schein, SHARE’s director of shareholder advocacy. Part of SHARE’s concern, he says, is that some of the metrics the company uses for calculating incentive compensation, such as sales growth and profitability, “are not actually appropriate to measure performance of the company … they are driven predominantly by inflation.”

Mr. Weston has made his messaging on inflation more pointed of late. Speaking about the company’s latest quarterly earnings on Wednesday, the Loblaw president pointed the finger at large global consumer packaged goods companies for what he called “outsized cost increases” on products.

At Thursday’s shareholder meeting, Mr. Weston said Loblaw has “contributed significantly” to keeping food inflation in check in Canada, in part by refusing $500-million in “unjustified cost increases” from suppliers. Mr. Weston added that Loblaw’s gross profit margins in food took a hit as the company did not pass on all of its cost increases in the form of higher prices, and even sold “many key essentials” at below cost.

“This made a difference,” he said. “Canada continued to have one of the lowest food inflation rates in the world.”

Follow David Milstead on Twitter: @davidmilsteadOpens in a new window
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