Schneider Electric and AVEVA to finally merge in £3bn deal
Schneider Electric is set to complete its £3bn merger with AVEVA, two years after the deal was initially mooted.
UK-based software engineering firm AVEVA will retain its headquarters in Cambridge but will now be held by a majority stake from Schneider's software arm.
An impressive number of sectors will now be covered by the joint company, combining AVEVA's reach in the energy market with Schneider's in the chemicals, food and beverages areas.
Two previous attempts at the deal by Schneider had fallen by the wayside in both 2015 and 2016 but it appears to be a case of third time lucky for the French giant.
"We are pleased to reach an agreement on the combination of AVEVA and the Schneider Electric Industrial Software Business, thereby creating a global leader in engineering and industrial software," said Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric.
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"The Combination will address customers’ requirements along the full asset life cycle in key industrial and infrastructure market through a unique portfolio of asset management solutions from design & build to operations.
AVEVA Chairman Philip Aiken added: "We are delighted to have reached agreement on the Combination with the Schneider Electric Software Business.
"The transaction will be transformational to AVEVA, creating a global leader in industrial software, which will be able to better compete on a global scale."
The formalities of the deal are expected to be completed by the close of the year, with £650mn worth of excess cash set to be distributed to AVEVA shareholders.
More than half of FTSE 100 execs suffer pay cuts, freezes
Pay increases for many executives at the largest UK firms have been put on hold since the start of the pandemic with more than half of the FTSE 100 CEOs having had their salaries frozen in 2021, according to new research from PwC.
The research, based on PwC’s analysis of the first 50 FTSE 100 firms to publish their 2021 annual remuneration reports, reveals that 53% of CEOs and 52% of CFOs have had their pay reviews put on hold, compared to 35% and 30%, respectively, last year, pointing to the pandemic as the main reason.
According to Phillippa O’Connor, reward and employment leader at PwC, the current environment and impact of the pandemic has clearly led shareholders to sharpen their pencils when reviewing executive pay levels this year.
“It is clear from the pay outcomes we have seen to date in the FTSE 100 that companies have exercised restraint when it comes to both determining outcomes for the 2020 performance year and settling pay on a forward-looking basis for 2021,” says O’Conoor.
Bonuses, grants and pensions also affected
But that’s not all. Around a third (31%) of companies either waived, cancelled or reduced their 2020 annual bonuses, with the average payout dropping from just uhnder £1.1m to £843,000.
When it comes 2021 long-term incentive plan (LTIP) grants, these have also been revised in light of the economic impact of the pandemic with 45% of firms making some adjustment to their award, including retaining discretion to adjust outcomes at vesting in respect of windfall gains, reducing grant size, delaying the grant, and even canceling the award altogether.
The study shows that pension levels for incumbent CEOs remain at 15% of their salary, falling to 10% for new hires, bringing them in line with the wider workforce. Eight out of 10 FTSE 100 companies will have aligned incumbent pension levels with those for the wider workforce by the end of 2022.
O’Connor warns that moving forward into AGM season, there is likely to be added scrutiny around any pay rises that are greater than those for the wider workforce and on incentive outcomes that are “either not aligned with business performance or do not take into account the company’s approach towards matters such as diviends and government support”.
What announcements did UK's big firms make?
Back in April 2020, as the pandemic was just getting started, a number of UK companies, mainly insurance and banking stepped forward to review remuneration packages in response to the economic implications of the COVID-19 crisis.
British insurance giant Aviva announced that basic pay increases for its executive directors and the Aviva leadership team would be paused, while the executive directors of Prudential offered that their salaries be reduced and RSA confirmed its exec directors and executive committee would not be receiving cash bonuses for the current year.
The same was true in banking and finance with TSB announcing that its 10-strong executive committee would give up their bonuses in 2020, while Barclays said its chief executive, finance director and chairman would each give a third of their fixed pay for the next six months to charities. Lloyds cancelled its bonus payments and pay reviews in 2020
Other big UK firms including Ryanair, Taylor Wimpey and Rentokil all committed to reducing their executives pay packages.