MP attacks Diageo on outgoing CEO Paul Walsh's 'excessive' pay packet

When he hands over to incoming CEO Ivan Menezez in July, Walsh will continue to net a £19.179m pension (he began receiving this on May 1 2011), which coupled with his existing stockholdings in Diageo and share options adds up to a cool £46m ($70m).

Kilmarnock and Loudoun MP, Cathy Jamieson, who represents the Scottish Labour Party, confirmed to BeverageDaily.com the accuracy of quotes given to the Scottish Daily Record,​ where she said that workers made redundant last year “would be outraged”​ at Walsh’s remuneration.

Johnnie Walker began selling his eponymous whiskey brand in a Kilmarnock grocer’s shop in the 1860s, and Diageo’s decision to close its bottling plant there in 2009 created shockwaves in Scotland, and led to 700 redundancies, although other jobs were found within the group for around 200 workers.

‘Astonished someone can walk away with so much’​

Jamieson told the paper that people in Kilmarnock would be “astonished that someone could walk away with so much money when so little is left in the town”​.

And she told BeverageDaily.com this morning: “People in my constituency still feel let down by Diageo.  Despite  the company giving land for the new Kilmarnock College, there is a view that Diageo should have left a much bigger legacy to the town after all the years of loyal service provided by the workforce.”​

Asked if she thought legislative measures should be taken to deal with ‘excessive’ executive pay outs, she added: “I would hope that we wouldn't need legislation to deal with such excesses. Surely companies themselves can show more restraint in these tough economic times.”​

Presented with Jamieson’s comment, a Diageo spokeswoman said the firm declined to comment on Walsh’s pay, but the MPs comments were echoed by Jennie Formby, national officer for food, drink and tobacco at Unite the Union, which represents many Diageo workers.

“Walsh is certainly not worth it. If you look at how much he’s raked in over the years with his share options. He shut down Kilmarnock and Port Dundass, and there other redundancies ongoing at the moment,”​ she said.

“He’s consistently raked in millions through share options, and had massive payouts throughout his tenure as CEO, at the same time as making people redundant, closing sites and destroying communities,”​ Formby added.

“Then he gets this payout on top of that. It’s just staggering, the arrogance with which these executives and boards operate, and seem to think there is nothing questionable about rewarding themselves with, say, ten times over lottery winnings, at a time when people are losing their jobs and having to cut back.”​

But Walsh delivered shareholder value…​

Asked for his verdict on Walsh’s tenure at Diageo – strictly from a business standpoint, Shore Capital analyst Phil Carroll told BeverageDaily.com: “I only really started looking at Diageo over the last three to four years. ​

“But from my perspective, looking over his tenure, he’s a man who turned a business that had a 20% operating margin into one that had a 30% margin,”​ the City analyst said.

“His return on investor capital has gone from about 11 to 14%, so it’s hard to say that the guy hasn’t delivered value for the shareholders. I think his track record speaks for itself, to be honest – I have a very high opinion of him and what he’s done there.”​

Carroll said he didn’t know Walsh’s successor, current COO Ivan Menezez, as well. “But he certainly seems to fit the Diageo mould. The culture of the company, how they develop people, how decisions are made as a business – I just expect him to follow suit.​

“We’ll probably find out more, in terms of how they develop the M&A trail, strategy, etc., but in the short term I think we’ll see more of the same. It’s not like they’re going to sell Guinness tomorrow, or that sort of thing, which would be quite drastic!”​