Pearson Proposes Revised CEO Pay Plan Up to £12.8 Million, Backed by Largest Shareholder Cevian Capital

Cevian Capital, Europe's largest activist investor and Pearson's biggest shareholder, stated it will back a revised pay arrangement for the education company's chief executive, Omar Abbosh. The maximum payout would be an increase of about 45 per cent on last year’s total potential package of £8.9 million, excluding the buyout by Pearson of share awards that he would have been entitled to under his previous employment.

Glass Lewis and ISS, two influential shareholder advisory groups, deemed Abbosh’s potential remuneration excessive. They recommended that shareholders vote against the executive pay proposals at Pearson’s annual meeting on May 1, 2026. ISS told investors that the substantial increase in the executives’ remuneration package and the resultant quantum are deemed excessive and are disproportionate to the company’s growth over the past few years.

Cevian Capital has built its stake in Pearson to just over 18 percent in recent months, making it the company's largest shareholder. The investor stated that the pay policy has clear pay-for-performance elements that would encourage long-term value creation.

Research from Deloitte showed that 16 of the 55 FTSE 100 companies that have published their annual reports for last year had proposed significant pay increases to executive pay.

Pearson suffered shareholder rebellions over changes in its executive pay policy in 2020 and 2023. In 2023, just over 46 percent of investors voted against an increase in payout for Andy Bird in a binding vote. Andy Bird, now 62 years old, was the former Disney executive who preceded Omar Abbosh as Pearson's chief executive.

Omar Abbosh, 60 years old and a former Microsoft executive, was appointed to lead Pearson at the start of 2024. To qualify for the maximum payout, Abbosh would need to achieve a return on capital of 16 percent in 2026, compared with Pearson's 11 percent return on capital in 2025.

Additionally, Abbosh would need to achieve adjusted operating profit growth of 14 percent in 2026, up from Pearson's 6 percent adjusted operating profit growth in 2025.

Glass Lewis said that shareholders may have reservations about the magnitude of the increase in maximum rewards available under the long-term incentive plan, which would position the company at the upper end of the FTSE 100 despite its positioning in the lower quartile of the index in market-value terms.

The Times reported these developments amid ongoing debates over executive compensation in FTSE 100 companies.