Fidelity calls for investor pay controls

ASSET manager Fidelity Worldwide Investment has called for all boardroom bonuses to require at least 75 per cent shareholder approval in an attempt to limit excessive payments to directors.

Fidelity ­– which manages assets of £165.5bn and over 740 funds – says directors should seek the approval of three quarters of shareholders in order to receive their annual windfall. If investors twice reject a proposal then the chairman of the remuneration committee would be required to resign.

“The simple truth is that remuneration schemes have become too complex and, in some cases, too generous and out-of-line with the interests of investors,” said Fidelity Worldwide Investment’s equities chief investment officer Dominic Rossi.

“Companies have nothing to fear if what they propose is fair and reasonable and clearly aligned to what is good for long-term shareholders,” he continued.

A spokesman for Pensions and Investment Research Consultants (PIRC), long term campaigners for executive pay reform, welcomed the proposals but said the 75 per cent threshold and lack of active investors meant that only the most excessive pay deals would be stopped: “There needs to be a focus on ensuring that shareholders take these issues more seriously. A big problem is the way that contracts are written so we’d like to see shareholders given a vote on the terms of a director’s contract.”

The total earnings of FTSE 100 directors increased 49 per cent in the last financial year to an average of £2.7m, despite a near-6 per cent decline in the FTSE 100 share index during 2011, according to research published in October by Incomes Data Services.