Shire, Unilever and Astrazeneca face another shareholder spring as corporate governance consultants slam executive pay ahead of investor votes

Jasper Jolly
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The Square Mile - London's Financial District
Investors in FTSE-listed companies have been urged to vote down pay deals (Source: Getty)

Some of Britain’s biggest companies are set to face a fresh bout of shareholder rebellions over high levels of pay after influential corporate governance consultants advised investors to vote down remuneration reports.

Pensions and Investment Research Consultants (Pirc) has raised concerns over executive pay at FTSE 100 companies Shire, Unilever and Astrazeneca.

The companies hold annual general meetings (AGMs) this week, with votes planned on pay awards for management.

Read more: FTSE 100 bosses' pay has dropped after to pressure from shareholders

Recent analysis by accountants PwC found pay for top FTSE 100 bosses had fallen in real terms, based on the first 40 blue-chip firms to reveal pay levels.

However, the shareholder advisers have identified multiple instances of pay they deem excessive.

Pirc said increases in executive pay at pharmaceutical firm Shire had outpaced the returns earned by investors, with chief executive Flemming Ornskov earning a salary above the average of bosses of similar companies.

The group also said longer-term incentives for Ornskov are “excessive”, at over seven times his base salary.

Read more: Shareholders really were revolting this year

Shire’s previous remuneration report received 48 per cent of votes against it at last year’s AGM. This year’s vote will be non-binding.

Pirc judged salary levels at Dutch-British consumer giant Unilever to be appropriate, but warned longer-term rewards were also too high, at almost five times chief executive Paul Polman’s base salary.

Polman’s pay is 139 times that of average employees at the company, a situation Pirc branded as “highly unacceptable”.

While Pirc recommended an abstention on passing the pay report, it said investors should vote down a new remuneration policy with multiple concerns over a complex system and overly generous rewards.

Read more: Another shareholder spring? "Nervous" execs ready themselves for AGM season

Under the plans Unilever executives will receive rewards for below-average performance, Pirc said, in a system it described as “contrary to best practice”.

Pharma giant Astrazeneca, which meets on Thursday, may also face a repeat of 2012, when shareholders rebelled. That rebellion cost chief executive David Brennan his job, although again this vote is non-binding.

Pirc said the company’s performance did not justify rising pay levels, according to the Guardian.

Pirc said: “The ratio of chief executive to average employee pay has been estimated and is found unacceptable at 152:1.”

It added: “The change in chief executive total pay over five years is not commensurate with the change in TSR [total shareholder return] over the same period.”

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