Fidelity revolts over executive short-termism

 
Michael Bow
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FUND manager Fidelity yesterday launched an attack on executive pay after revealing it voted against aspects of pay deals at more than half of UK annual meetings this year.

The influential group, which owns stakes in hundreds of UK-listed companies, said it had voted against remuneration proposals for 52 per cent of FTSE 350 firms it voted on this year.

The group yesterday released a list of 27 companies on the FTSE 100 it backed on long-term pay plans after they responded to the group’s demands.

Fidelity wants to ban bosses from cashing in bonus shares after three years and force them to hold shares for at least five years before cashing out.

The group currently votes against any plans – known as long term incentive plans (LTIPs) – which let bosses sell bonus shares after holding them for three years.

A total of 20 firms on the FTSE 100 currently allow executives to sell bonus shares between three to five years after they were granted, which Fidelity also welcomed.

But the group said it would stop voting in favour of this practice from 2015 onward.

“A long-term incentive programme which is three years is a misnomer because an executive who can cash out after three years doesn’t necessarily reflect the value that individual has created,” Fidelity Worldwide Invest­ment chief investment officer Dominic Rossi said.

“It’s true to say these changes haven’t come without some pain as a result of the policy,” Rossi added.

FIDELITY’S BLACKLIST

FTSE 100 firms with three-year LTIPs
Aberdeen Asset Management
BSkyB
G4S
Hargreaves Lansdown
Marks & Spencer Group
Prudential
Tesco
Vodafone

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