The data coming out of this year’s annual general meeting (AGM) season is showing shareholders are putting pressure on firms to reduce executive remuneration.
Analysis of the 2017 AGM season voting data, conducted by the Investment Association, has shown many FTSE 100 companies who saw large shareholder votes against pay in 2016, have yielded to submitting more conservative pay policies for their executive teams in 2017. The IA found a 35% decrease in 2017 remuneration resolutions that received over 20% dissent.
However, FTSE 250 firms saw dissent amongst shareholders double from 2016 levels, with 29 companies seeing votes with more than 20% dissent, which is up from 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 turned on individual directors, questioning their accountability at this year’s AGMs. Votes of 20% or more cast against individual directors soared 525%, from four directors in 2016 to 21 directors in 2017.
In May, Old Mutual shareholders threatened rebellion over the company’s director remuneration. At the firm’s AGM, of the votes cast, 28% voted against a motion to approve the remuneration report for the year ended 31 December 2016, with 72% voting in favour.