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Shareholders take aim at FTSE 250 bosses' pay

A growing number of shareholders are taking company bosses to account on executive pay.

 
Shareholders take aim at FTSE 250 bosses' pay

Shareholders are successfully applying pressure to FTSE 100 and FTSE 250 companies to reduce executive remuneration.

Analysis of the 2017 AGM season voting data, conducted by trade body The Investment Association (IA), has shown that FTSE 100 companies who saw large shareholder votes against pay in 2016 have responded by submitting more conservative pay policies for their executive teams in 2017. The IA noted a 35% decrease in 2017 remuneration resolutions that received over 20% dissent.

It was a different story with FTSE 250 businesses, which saw dissent amongst shareholders double from 2016 levels. During 2017, there were 29 companies with votes that attracted more than 20% dissent. This compares to a dissent level of 15% in 2016.

‘Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account,’ said IA chief executive Chris Cummings.

‘Executive pay amongst the UK’s largest companies is starting to decline to a level more in line with shareholder expectations. There is still some way to go, but a strong signal has been sent to boardrooms around the country that investors won’t tolerate rewards that are out of line with company performance and have concerns about executives’ spiralling pay.’

Shareholders also scrutinised the accountability of individual directors at AGMs this year. Votes of 20% or more cast against individual directors soared 525%, from four directors in 2016 to 21 directors in 2017.

The AGM season also saw a new trend of several FTSE 350 companies withdrawing resolutions on executive pay packages ahead of shareholders voting. This was due to concerns that the packages might attract significant investor rebellion.

Advertising giant WPP saw one of the most high profile shareholder rebellions this year, after 33.5% of shareholders opposed chief executive Martin Sorrell's £70 million pay package.

In May, Old Mutual's shareholders also threatened rebellion over executive remuneration. At the firm’s AGM, 28% of shareholders voted against a motion to approve the remuneration report for the year ended 31 December 2016.

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