Proxy battle fails to erupt as investors wave through FTSE 350 payouts
A battle over executive pay in the City has failed to materialise so far this year as investors wave through bigger salaries despite fears of a backlash, new data has suggested.
Boardrooms across London have been braced for rebellions in the coming weeks as they look to hike the compensation of top executives through ‘annual general meeting season’, when shareholders typically gather to vote on corporate policies.
Fears have grown of a standoff as top proxy groups Glass Lewis and ISS, which advise shareholders on how to vote, have mounted resistance against some payouts on the grounds they are “excessive”.
However, despite fears of backlash, remuneration packages tabled in the UK between January and March saw an “extraordinary surge in support”, data firm Computershare found in new research.
Not one of the 34 FTSE 350 firms to hold their AGM in the first quarter faced “significant opposition” from shareholders, the firm said. Significant opposition was defined as receiving 20 per cent or more ‘against’ votes from shareholders.
The numbers are in stark contrast to the same period last year when nearly 12 per cent of pay policies triggered pushback from shareholders. In the first three months of 2022, nearly 18 per cent of pay policies faced resistance.
“This trend of fewer remuneration reports being contested suggests a softening approach from some investors on the issue of remuneration and perhaps a willingness to see executive remuneration packages in the UK in the context of global standards,” analysts at Computershare said.
The figures come amid a thorny debate raging in London over the salaries made by bosses and the ability of listed firms to attract top talent. Some in the City argue that they face an uphill battle recruiting executives due to the hefty salaries made in the US, which dwarf those paid to UK executives.
Proxy firms have been blamed for resisting payouts for top executives in the UK despite giving the green light to far bigger salaries at US companies.
While resistance from proxy groups has picked up in the past month, ISS, the biggest proxy firm, issued no ‘negative recommendations’ on the approval of remuneration reports in the first three months of the year among the 34 FTSE 350 companies to hold their AGMs.
During the same period in 2023, ISS opposed three of the proposed pay hikes, and seven of the 39 proposals put forward in the same period of 2022, according to Computershare.
The minor scale of resistance so far this year may settle some in the City as proxy firms themselves admit they have limited sway over shareholders even when opposing corporate policies.
ISS recommended against roughly 13 per cent of all pay proposals at the top 3,000 U.S. companies last year but “just two per cent failed to receive majority support,” a spokesperson told City A.M.
“Clearly, investors decide themselves how to vote,” they added.
Several London-listed companies have already seen off resistance from shareholders in recent weeks. Investors backed a bumper pay rise for Astrazeneca boss Pascal Soriot earlier this month to a maximum of £18.7m despite resistance from 35 per cent of shareholders, clearing the threshold of “significant opposition”.
This week, London Stock Exchange Group shareholders will weigh in on a pay rise for chief executive David Schwimmer, which has already faced resistance,
Paypackets have been higher up the agenda in the City after the boss of the London Stock Exchange Julia Hoggett warned that London firms were losing out on top talent to the US.
The pay of top bosses has been climbing in recent years despite pushback from some proxy groups.
FTSE 100 chiefs made an average of £4.4m in 2022, up 16 per cent on the previous year, according to the thinktank, the High Pay Centre.
However, bosses at S&P 500 US companies are paid an average of $16.7m (£13.1m), three times the UK, according to the US trade unions federation AFL-CIO, reported by the Guardian.