Shareholders ramped up opposition to listed company pay proposals this year, according to the UK’s asset management trade body.

The Investment Association (IA) said data from the 2017 annual general meeting (AGM) season showed FTSE350 companies were responding to investor pressure to reduce executive remuneration.

“At a critical time for pay policy renewal, investors are effectively holding FTSE100 and FTSE250 companies and their individual directors to account on executive remuneration,” it said.

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

According to the IA’s analysis, investor “rebellions” – more than 20% of votes against – against executive pay resolutions at the UK’s top 100 listed companies were down from 14 in 2016 to nine this year, but nearly doubled at FTSE250 companies.

In 2017 29 FTSE250 companies experienced more than 20% dissent against pay proposals, up from 15 last year.

The IA attributed the fall in opposition to pay policies at FTSE100 companies in part to the strong dissent experienced in 2016. Firms that came under pressure last year submitted “more conservative” policies this year, which were more in line with shareholder expectations.

In addition, six FTSE350 companies withdrew executive pay packages before their AGMs due to fears of significant opposition: Aveva, Aggreko, Chemring, Imperial Brands, Hunting, and Safestore.

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. This has to be renewed every three years under legislation introduced in 2013.

There was a sharp increase – 400% – in the number of companies experiencing a substantial vote against at least one director’s re-election. In 2016, only four directors’ re-elections were opposed by more than 20% of voting shareholders. This year 21 directors faced significant opposition to their re-election. 

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Chris Cummings, CEO 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.”

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.

“But with an increase in the number of shareholder rebellions at FTSE 250 firms over bosses’ pay packets we cannot afford to take our eye off the ball,” she said.

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 last year.

James said the government’s reforms would “improve boardroom accountability and enhance our reputation as one of the best places in the world to do work, invest and do business”.