Shareholders have this year ramped up pressure on UK-listed firms over excessive executive remuneration, research published this week showed.
Analysis of the 2017 annual general meeting (AGM) season found that many of the FTSE 100 companies who saw large shareholder votes against pay in 2016 submitted “more conservative” pay policies this year that were “more in line with shareholder expectations”.
The research, by the UK’s Investment Association (IA), found a 35% drop in pay proposals that received significant dissent from shareholders, defined as at least 20% of AGM votes.
The IA, which represents fund managers with assets under management of around £5.7 trillion (€6.3 trillion), also found that significant investor rebellions over executive remuneration took place this year at 29 of the companies in the FTSE 250.
IA chief executive Chris Cummings said: “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.”
Business minister Margot James said there were now encouraging signs that the UK’s largest firms 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,” she said.
According to the High Pay Centre think tank and the Chartered Institute of Personnel and Development, the pay of FTSE 100 bosses fell from an average of £5.4 million (€5.9 million) in 2015 to £4.5 million in 2016.
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