Many of Britain's biggest firms face shareholder revolts as executive pay dominates the agenda

 
Oliver Gill
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2012 saw 84 companies receive significant votes against resolutions (Source: Getty)

One in five of Britain's biggest companies face "significant shareholder dissent" at upcoming AGMs this spring, a major UK shareholder organisation has warned.

Research by the Pensions and Lifetime Savings Association (PLSA), which represents shareholders with more than £1 trillion of assets, projects 73 of the FTSE 350 will be hit by at least one resolution attracting a significant vote against.

The PLSA defined a "significant" vote as more than 20 per cent.

While such dissent is a jump from last year, 64 companies saw 86 problem resolutions, it is well below the 2012 high-water mark of 84 FTSE 350 firms affected.

Executive pay is likely to be the most controversial aspect, the PLSA said, with 34 firms facing votes against remuneration packages.

The PLSA report also revealed investors were focusing on those proposing exec pay as well as those receiving it.

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In 2016, average dissent levels over remuneration policies were four times higher than dissent over the re-election of remuneration committee chairs as directors. Whereas un 2017, they were less than twice as high, suggesting that most shareholders are now voting against the remuneration committee chair if they vote against the remuneration policy.

“Last year we surveyed our members to find out their views on executive pay – over 85 per cent of respondents said they felt pay levels were too high and 87 per cent said they were concerned by pay gaps between executives and the wider workforce," said PLSA corporate governance policy lead Luke Hildyard.

“We subsequently recommended that pension fund investors vote against the re-election of remuneration committee chairs responsible for pay practices when voting against their remuneration policy or report. It’s encouraging to see these recommendations are having a positive effect, particularly alongside the fall in executive pay levels recorded last year, but there is still considerable room for shareholder scrutiny of pay practices to improve."

He continued: “We remain concerned that too many companies are failing to communicate the link between their employment models and their wider strategy and purpose."

Read more: May warned over knee-jerk executive pay reform after Carillion collapse

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