Shareholders turn on FTSE 250 in latest pay battle

Paterniano Del Favero
Agosto 16, 2017

Chris Cummings, chief executive of the IA, said the data showed investors were "flexing their muscles and holding big business to account".

Recent analysis from the CIPD and the High Pay Centre showed that United Kingdom chief executives' average pay fell 17% in the past 12 months.

It found a 35% decrease in the remuneration resolutions that received more than 20% dissent, suggesting FTSE 100 companies submitted more conservative executive pay policies that were better in line with shareholder expectations.

A number of FTSE 100 companies have listened to and acted on concerns raised by shareholders a year ago, with a 35% decrease in 2017 remuneration resolutions receiving over 20% dissent.

This year's AGM season was an important one for executive remuneration because shareholders were given a binding vote on pay for the next three years.

The 2017 AGM season has also seen a new trend of several FTSE 350 companies withdrawing resolutions on executive pay packages ahead of shareholder voting due to concerns over "significant investor rebellion".

Shareholders also turned their attention to individual director accountability at this year's AGMs, with votes cast against individual directors soaring 525 per cent, from 4 directors in 2016 to 21 directors in 2017 seeing 20 per cent or more votes against.

Names in this index overall saw a 400% increase in votes against a director re-election.

Shareholder votes against executive pay deals - such as the one that hit Clarksons - are becoming more frequent, a new study has found.

Shareholders are having an impact on management pay at the largest UK-listed companies, according to data from the Investment Association (IA).

He said there was still, "some way to go, but a strong signal has been sent to boardrooms around the country that investors won't tolerate rewards that are out of line with company performance and have concerns about executives' spiralling pay".

The UK government is expected to publish soon its response to a consultation on corporate governance reforms it set out in a green paper in November a year ago.

"But with an increase in the number of shareholder rebellions at FTSE 250 firms over bosses' pay packets we can not afford to take our eye off the ball", she said.

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