The level of protest votes by shareholders at company annual meetings has tailed off since its peak six years ago but institutional investors remain concerned about excessive executive pay, an analysis has found.
The Pensions and Lifetime Savings Association said that last year 117 shareholder resolutions at 73 companies in the FTSE 350 attracted “significant dissent” among shareholders.
This compares with 193 resolutions relating to 84 companies that were hit by protests in 2012, the year of the “Shareholder Spring” uprising when investors flexed their muscles over pay and at least three company bosses lost their jobs as a result.
For a protest to be defined as significant dissent, according to the association, shareholders speaking for at least 20 per cent of the votes cast must either vote against a resolution or withhold their vote to register disapproval.
Annual meetings are seen as an important barometer of how investors feel about a company’s strategy and its management, and they provide a public forum for individual and institutional owners to have their say.
Advertisement
Rising pay has become a big concern for institutional investors, particularly when bosses are rewarded when the companies they run have missed targets or have not been trading well. Shareholders now have a binding vote on the pay policy of companies, set every three years, and the prime minister has vowed to crack down on excessive boardroom pay.
According to the association’s findings, many investors are still voting against what they deem to be unacceptable pay packages. The number of remuneration-related resolutions that attracted significant dissent last year stood at 49, the same level as in 2012, though they applied to 34 companies in 2017, against 45 six years ago.
The report also found that investors are increasingly turning their fire on the remuneration committees that set and approve executive pay. In 2016, the average level of dissent against pay policies was four times higher than for the re-election of the heads of remuneration committees. Last year, it was less than twice as high.