Shareholder spring? Number of British investor pay revolts falls
The government’s plans to spur a new era of shareholder pressure on executive pay appear to have fallen flat, as new figures show a fall in the number of rebellions on pay.
The number of shareholder pay revolts among Britain’s listed companies fell to 61 during the first half of 2018, down from 68 last year, according to figures to be published today by the Investment Association (IA).
Companies are included on the IA’s public register if more than 20 per cent of votes are cast against a resolution at the firm’s annual meeting, or if a resolution is withdrawn. The government hoped the register would pressure firms into listening to shareholders.
The register had faced criticism because it only collated information already in the public domain. The IA has no powers to sanction firms who ignore shareholder outcries.
There was a notable increase in rebellions among FTSE 100 firms, with 18 pay-related resolutions on the register, compared to nine last year. However, the number of rebellions among FTSE 250 firms almost halved to 24.
Prominent firms which saw significant shareholder rebellions during the first half of the year included Royal Mail and satellite firm Inmarsat, while housebuilder Persimmon avoided defeat by the narrowest of margins.
Chris Cummings, chief executive of the Investment Association, said the rise in FTSE 100 pay revolts was “deeply disappointing”, because it shows an increase in the number of firms with objectionable pay policies.
He said: “FTSE 100 companies must do more to ensure the pay packets of their top team align with company performance and remain at levels that shareholders find acceptable.”
However, investors have “shown their teeth” on the re-election of company directors, Cummings added, with objections to decisions on pay and board diversity, as well as widespread concerns over the practice of holding multiple simultaneous directorships.
The number of shareholder rebellions on director re-election among mid-cap FTSE 250 companies more than doubled to 37, while on the broader FTSE Small Cap index the number rose further, from 15 to 39.