Shareholders are having an impact on management pay at the largest UK-listed companies, according to data from the Investment Association (IA).
The trade body for the fund management industry pointed to the spate of votes against remuneration packages for FTSE 100 bosses witnessed in 2016, and that has caused management to submit more “conservative” pay packages for shareholder approval.
The IA findings come in the wake of data showing a drop in the pay of FTSE 100 chief executives, details of which were released last week.
There was a 35 per cent decrease in FTSE 100 companies remuneration reports attracting significant dissent from shareholders, defined by the IA as 20 per cent of shareholders at the annual general meeting (AGM) of a company.
The IA data indicated that investor scrutiny has moved to the FTSE 250, where there has been a 100 per cent increase in the number of company remuneration reports attracting votes of at least 20 per cent against, when put to shareholders.
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.
The 2017 AGM season also saw a new trend of several FTSE 350 companies withdrawing resolutions on executive pay packages ahead of shareholders voting, due to concerns over significant investor rebellion.
Chris Cummings, chief executive of the IA, said: “Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account.
“Executive pay amongst the UK’s largest companies is starting to decline to a level more in line with shareholder expectations.
"There is 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.”
David.Thorpe@Ft.com
