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Pensions

2018 AGM season sees spike in shareholder rebellion over executive pay

2018 AGM season sees spike in shareholder rebellion over executive pay

Mona Dohle
Thursday 30th August 2018

Voting trends during the 2018 AGM season suggest that shareholder rebellions over executive pay are on the rise.

Shareholders rebelled in more than 120 FTSE All Share Company AGM’s, with more than 20% of participants expressing disagreement, data provided by UK asset management trade body the Investment Association revealed.

For the past two years, the industry body has kept a public register of AGM votes where more than 20% of shareholders have rebelled, in a bid to reinforce levels of accountability at listed companies.

Re-election of top executives was a key issue of controversy for many investors, the number of resolutions opposing the appointment of top managers doubled from 38 to 80 year on year.

For FTSE250 companies, the trend was even more pronounced, resolutions to oppose individual appointments increased by 106 from 18 to 37 year on year, the Investment Association said.

Executive pay was also a growing concern for investors in FTSE100 companies, in 18 cases more than 20% of shareholders objected to proposed salaries for company bosses. “Shareholders clearly remain unimpressed with the approach to pay last year, and are frustrated the message is not getting through to some boardrooms.

“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” said Chris Cummings, chief executive of the Investment Association.

“Shareholders now need to see companies acting on their pledges to deal with investor concerns or risk facing another backlash next year” he adds

The latest data on FTSE100 executive pay released in August by the Chartered Institute of Personnel and Development (CIPD) reveal that salaries of top managers have increased by 11% between 2016 and 2017. Factoring in additional rewards such as bonuses, the mean annual pay package of FTSE1000 executives increased by 23%  in 2017.

Collectively, FTSE100 executives earned £561m with the mean average pay package amounting to £5.7m. In contrast, ONS data highlight that the median pay for fulltime workers in the UK has increased by 2% from £28,213 to £28,758 over the same period.

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