Arm chief faces threat of investor revolt over $800m pay deal
Tech giant Arm is facing a potential shareholder revolt over plans to hand its chief executive an "excessive" bonus of up to $800m (£590m).
Shareholder advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have told investors to vote against a scheme that would reward Rene Haas if he could turn Arm into Britain's first trillion-dollar company .
Mr Haas stands to make up to $800m in shares under a proposed "value creation plan" (VCP). He would receive escalating share awards if Arm became worth $1tn, followed by further tranches if it hit $1.5tn and $2tn.
ISS said in a note telling investors to vote against the pay package: "VCPs, which remain uncommon in the UK market, raise concerns over potentially excessive large gains and are unproven in their efficacy in improving performance."
Glass Lewis raised similar concerns in another report, which also described the package as "excessive".
Shareholders are set to vote on Mr Haas's pay scheme at the company's annual meeting on Sept 9.
Arm is valued at $264bn, having lost almost half of its value since a peak in June, meaning that the share award would only be triggered if Mr Haas could achieve a surge in the company's share price.
While VCPs are more common in the US, ISS said they were "uncommon in the UK market". Arm, despite being founded and based in Cambridge, is listed on the Nasdaq and Mr Haas lives in California.
When it announced the deal, Arm said the payment was designed "to be competitive with US standards reflecting the location of our key competitors for executive and other talent, the listing... on Nasdaq and the US-location of our CEO".
While ISS is seen as an influential adviser to large shareholders, there is little chance of Mr Haas's pay scheme being rejected because Japanese giant SoftBank owns 86pc of the company's shares.
ISS also recommended voting against the re-election of Mr Haas and Masayoshi Son, the chairman, to the board because of the company lacking enough independent directors.
SoftBank took Arm off the London Stock Exchange in 2016 before listing it in the US two years ago. Mr Haas was given an additional role in charge of SoftBank's international business earlier this year.
Arm has bet its future on selling more AI chips to data centre companies but the company's shares have suffered in recent months amid a slump in the smartphone market caused by higher prices.
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