FTSE 100 companies address shareholder concerns on pay in 2017 AGM season
FTSE 100 companies have responded to last year's investor rebellions regarding executive pay, with "more conservative policies" being adopted according to new analysis from the Investment Association (IA).
Voting data from the 2017 AGM season compiled by the IA has found investors are effectively holding FTSE 100 and FTSE 250 companies and their individual directors to account with regards to executive remuneration.
A number of FTSE 100 companies have listened to and acted on concerns raised by shareholders last year, with a 35% decrease in 2017 remuneration resolutions receiving over 20% dissent.
More conservative pay policies - which were up for their three-year renewal - have been put into place this year for executive teams, which are now more in line with shareholder expectations.
Overall, rebellions on all remuneration resolutions in the blue-chip index were down from 14 in 2016 to nine in 2017.
Meanwhile shareholders in FTSE 250 companies have followed begun speaking up more recently, with a 100% increase in companies getting 20% or more votes against their remuneration resolutions compared to last year.
Investors are also speaking out against individual director accountability at this year's AGMs, with 21 directors this year seeing 20% or more votes against them, up from just four in 2016.
The 2017 AGM season has also seen a new trend of several FTSE 350 companies withdrawing resolutions on executive pay packages ahead of shareholder voting due to concerns over "significant investor rebellion".
Names in this index overall saw a 400% increase in votes against a director re-election.
IA response
The IA has long called for more flexible and simpler remuneration, having written to the FTSE 350 constituents in October last year on this subject.
It set out shareholder expectation and called for the publication of pay ratios, instructing the FTSE 350 to improve the disclosure of bonus targets under the Government's Corporate Governance Reform Green paper proposals.
Chris Cummings (pictured), CEO of the Investment Association, said: "Data from the 2017 AGM season shows investors are flexing their muscles and holding big business to account.
"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 will not tolerate rewards that are out of line with company performance and have concerns about executives' spiralling pay.
"Well-run and well-performing companies that yield long-term shareholder returns are critical to ensuring that British savers and pensioners are able to lead more prosperous lives into their later years."
Margot James MP, business minister, said: "The UK's largest companies are showing encouraging signs they are listening to shareholders and wider concerns about executive pay.
"But with an increase in the number of shareholder rebellions at FTSE 250 firms over bosses' pay packets - we cannot afford to take our eye off the ball.
"Our responsible business reforms, which will be published shortly, will improve boardroom accountability and enhance our reputation as one of the best places in the world to work, invest and do business."
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