Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Standard Life & SJP make Fidelity FTSE 100 pay white list

Standard Life & SJP make Fidelity FTSE 100 pay white list

Fidelity Worldwide Investment believes more action needs to be taken to avert short-termism in management incentive schemes.

The introduction of new legislation last year gave shareholders the power to influence policies on executive pay. Fidelity had initially lobbied firms to extend the period in which executive could dispose of shares under long term incentive plans (LTIPs) back in 2012.

The fund manager informed its UK and European investee companies that it would use these new powers to extend the minimum retention period, supporting those firms with that lengthened holding periods to five years from 2015.

While Fidelity, which controls $275 billion, is pleased with progress, it has voted against the proposals of the majority of FTSE firms, backing the LTIPs of 27 blue chips.

Companies on the list include Standard Life, St James's Place, Barclays, Lloyds and HSBC.

However, the likes of Aberdeen Asset Management, SchrodersHargreaves Lansdown and Prudential are not included.

Fidelity Global chief investment officer Dominic Rossi (pictured) said in a statement: 'Last year new legislation gave fresh powers to shareholders to scrutinise executive remuneration.

'Fidelity Worldwide Investment supported this legislation which has given shareholders a powerful new tool to influence companies’ policies on pay. We are now past the peak of the 2014 Annual General Meeting season and we are beginning to see the impact of this development.

He added: 'One of our principal concerns has been that management incentives have been too weighted towards the short term. We have argued that lengthening incentive schemes would change corporate behaviour for the better, reducing the temptation to maximise short term financial performance, and instead promote investment and growth. 

'We would vote against any companies which did not comply, even if every other aspect of the company’s policy on pay was acceptable.'  

Rossi noted that at start of 2013 only four FTSE 100 companies had a minimum LTIP share retention period of five years, with a further a 13 companies having a minimum retention of between three and five years.

'This experience has highlighted that votes matter and changes can be made. In a relatively short period of time, almost half of the FTSE 100 has broken away from the standard three-year LTIP model, which has prevailed for so long,' Rossi said.

'This progress should only encourage all shareholders to use their new powers to the fullest extent.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Volatility is back, Europe's future & Ethical's key moment

Volatility is back, Europe's future & Ethical's key moment

This week’s episode of Investment Pulse takes a look at European prospects, FTSE volatility and whether public pressure is about to provide a push for ethical investment

Play Volatility spike: How ETFs can soften the blow

Volatility spike: How ETFs can soften the blow

ETFGI’s Deborah Fuhr discusses the role of ETFs in client portfolios during volatile market conditions

Play Winter market warmers, the post QE world and timing the Fed

Winter market warmers, the post QE world and timing the Fed

This week’s episode of Investment Pulse looks at the winding down of quantitative easing, whether to try and time a US Federal Reserve rate rise and if strong seasonal performers can reverse recent market slumps

Wealth Manager on Twitter