Diageo CEO takes 35% pay cut Posted by: Alana House August 10, 2017 Diageo CEO Ivan Menezes has been given a 35% pay cut and CFO Kathy Mikells' salary has been slashed by 50% after the company missing long-term targets in its latest results. According to Diageo's 2017 annual report Menezes was given 45,477 shares in the company in 2014, with payout due this year subject to a performance condition based on specific targets. The long-term bonus plan was subject to factors including compound annual growth in earnings per share, set at a minimum target of 6% p.a. and 11% p.a. The threshold, however, was not met at 3%. The report stated: “As a result of the long-term incentive performance conditions not being achieved, total variable pay to the chief executive and the chief financial officer in respect of the year ended 30 June 2017 is 35% and 50% lower respectively than in the year ended 30 June 2016.” Though organic net sales grew 4% to reach £12.1 billion in its 2016/17 financial year, the result was not as strong as in previous years. Shares skyrocket despite missed targets The board's view of the results was vastly different to investors' - Diageo’s shares skyrocketed following the announcement in late July that the company was launching a £1.5 billion share buy-back program following a 15% increase in net sales to £12.1 billion, which resulted in a 5.5% rise in its share price to a record £23.90. Menezes noted at the time: “Diageo is a strong company today and we are confident in our ability to deliver sustainable growth,” said Ivan Menezes, Diageo chief executive. “We are raising our productivity goal to £700 million with two thirds being reinvested in the business. We continue to expect mid-single digit top line growth, and we are raising our operating margin expansion objective to 175bps over the three years ending 30 June 2019. “Our performance demonstrates the effective delivery of our strategy through disciplined execution of our six priorities put in place four years ago. We have delivered consistent strong performance improvement across all regions and I am pleased with progress in our focus areas of US Spirits, scotch and India. “Our productivity work is delivering ahead of expectations allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cash flow. Through productivity we have embedded an everyday efficiency mind set in the business and with improved data and insight we are making faster, smarter decisions on investment choices.” The booming brands Diageo, which owns 200 brands across 180 countries, said whisky sales rose by 5% over the period thanks to growth in all regions except for Asia Pacific, with Johnnie Walker and Buchanan's climbed by 6% and 16% respectively. Baijiu brand Shui Jing Fang experienced the greatest organic growth – 65% – while Don Julio Tequila and Bulleit Bourbon also saw strong double-digit gains at 25% and 24% respectively. However, vodka, which represents 12% of the group's net sales, dropped by 4%, as Ciroc and Ketel One showed weaker sales in the American market. Smirnoff net sales were also down 1%, challenged in a competitive vodka category in the US. Guinness sales were also flat.