Shareholders now take aim at FTSE 250 bosses' pay

Cornelia Mascio
Agosto 16, 2017

In the FTSE 250, shareholder dissent doubled this year with the number of companies seeing votes with more than 20% dissent increasing to 26, up from 15 in 2016.

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.

Investment Association chief executive Chris Cummings said: "Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account".

This year's AGM season differed from last year's as most listed companies had to seek a binding vote on their policy for executive remuneration.

Meanwhile shareholders in FTSE 250 companies have followed begun speaking up more recently, with a 100% increase in companies getting 20% or more votes against their remuneration resolutions compared to previous year.

Six FTSE 350 companies pulled resolutions on pay ahead of their AGMs for fear of shareholder rebellion. In 2016, only four directors' re-elections were opposed by more than 20% of voting shareholders.

The IA has long called for more flexible and simpler remuneration, having written to the FTSE 350 constituents in October a year ago on this subject.

The business minister, Margot James, said the UK's largest companies were showing encouraging signs of listening to shareholders as well as wider concerns about executive pay.

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

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".

"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".

It set out shareholder expectation and called for the publication of pay ratios, instructing the FTSE 350 to improve the disclosure of bonus targets under the Government's Corporate Governance Reform Green paper proposals.

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