mast image

Special Report

Impact investing

Sections

‘Sharp rise’ in shareholder rebellion over FTSE 100 pay in 2018

Related Categories

Shareholders expressed “significant dissent” over twice as many pay-related resolutions at FTSE 100 company general meetings this year than last year, according to analysis by the trade body for the UK asset management industry.

During the annual general meeting (AGM) season this year, more than 20% of shareholder votes were against management on 18 pay-related resolutions, compared with nine in the same period last year.

Executive pay was less of an issue for companies listed on the broader FTSE All Share this year, however, with the Investment Association (IA) recording 61 resolutions in its public register as opposed to 68 last year.

Since being asked to do so by the government last year, the IA maintains a public register of FTSE All Share companies where more than 20% of votes on any resolution at an AGM or general meeting were against management.

Chris Cummings, chief executive of the IA, said the jump in the number of FTSE 100 companies facing a pay rebellion this year was “deeply disappointing”.

“Shareholders clearly remain unimpressed with the approach to pay last year, and are frustrated the message is not getting through to some boardrooms,” he said. “FTSE 100 companies must do more to ensure the pay packets of their top team align with company performance and remain at levels that shareholders find acceptable.”

According to recently published research from the High Pay Centre and the Chartered Institute of Personnel and Development (CIPD), median pay of CEOs at FTSE 100 companies increased by 11% between 2016 and 2017 “despite prominent criticism from the investor community and the government over excessive CEO pay awards”.

If the mean measure were used, CEO pay increased by 23% in 2017, according to the High Pay Centre and CIPD.

The IA’s data for this year’s AGM season showed that shareholder rebellions against the re-election of individual directors more than doubled, with the number of resolutions attracting a vote of more than 20% against increasing from 38 in 2017 to 80 in 2018. 

Among the 46 companies that were added to the public register in 2018 due to opposition over director re-election, nearly half (43%) drew significant dissent from shareholders over their proposal for the chair to be re-elected.

This pointed to “a growing disquiet over individual accountability for the decisions made”, said the IA.

Overall, shareholders expressed “significant dissent” over 237 resolutions at FTSE All Share companies in 2018, a quarter more than last year, according to the IA. This landed 120 companies in the public register, up from 110 companies last year.

Related images

  • Governance at UK pension schemes 'not fit for purpose'

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2543

    Asset class: Search of an Asset manager / Advisor managing / Advising a risk-based equity derivatives overlay program.
    Asset region: Global Developed Markets Equities, Global Emerging Markets Equities, Swiss Equities.
    Size: CHF 700-2100 million.
    Closing date: 2019-06-17.

  • QN-2544

    Asset class: Transitional Real Estate Debt.
    Asset region: North America (USA/Canada).
    Size: $50-100mn.
    Closing date: 2019-06-17.

  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

Begin Your Search Here
<