Increasing number of investors vote against FTSE 250 pay deals
Around a quarter of FTSE All-Share companies were subject to shareholder discontent and appeared on the Investment Association’s (IA) Public Register in 2019, with a high percentage of shareholder votes opposing FTSE 250 companies’ remuneration packages during last year’s proxy season, reveals the association.
The register records whenever there is at least 20 percent of shares voted against a corporate board decision at an annual general meeting or general meeting.
The lobby group, which represents 250 fund managers with £7.7 tn ($9.9 tn) in assets under management, saw 158 UK public companies appear on the register in 2019, up from 151 listed firms subject to protest votes in 2018.
|Total||FTSE 100||FTSE 250||FTSE Small Cap|
|Number of companies on the public register in 2019||158||21||70||67|
|Number of companies on the public register in 2018||151||21||55||75|
|Number of resolutions on the public register in 2019||298||35||131||132|
|Number of resolutions on the public register in 2018||294||30||115||149|
|Number of pay-related resolutions on the public register in 2019||76||18||36||22|
|Number of pay-related resolutions on the public register in 2018||74||18||28||28|
|Number of director-related resolutions on the public register in 2019||103||8||43||52|
|Number of director-related resolutions on the public register in 2018||105||5||47||53|
Source: Investment Association
Companies appearing on the register for more than one issue include those subject to resolutions on remuneration reports, pay-related matters and votes cast against re-electing certain directors. In 2019 the number of resolutions went up to 298 from 294 in 2018, indicating growing investor discontent with board decisions.
Spotlight on remuneration policies
Shareholder opposition votes on FTSE 250 remuneration packages rose significantly during the last year. In 2019, the number of pay-related resolutions on the register rose by just over 28 percent on the previous year, from 28 to 36. For FTSE 100 cases, the number of pay-related resolutions remained steady in 2019 compared with 2018, with 18 remuneration resolutions voted against in both years.
Andrew Ninian, IA’s director for stewardship and corporate governance, tells IR Magazine that ‘FTSE 100 companies often lead the way in implementing changes and tend to react more quickly to shareholder requests, whereas it can sometimes take more time for FTSE 250 companies.’
In total, 76 pay-related resolutions were registered in 2019, an increase of 3 percent on 2018. Some companies had multiple remuneration resolutions voted against.
The re-election of board members remained another key concern for shareholders in 2019. The number of director-related resolutions ticked down to 103 last year from 105 in 2018. Despite the slight decrease, the significant number of cases in the last two years reflect increased scrutiny of director elections.
A continuing trend
Executive compensation is expected to remain in the spotlight in the UK in 2020, notes Ninian. ‘Investment managers are keeping up the pressure on companies to align executive pay with their long-term strategy,’ he says.
‘With a quarter of FTSE All-Share companies ending up on the register in 2019, investment managers will be paying close attention when companies bring their pay policies to the table to see whether they’ve heeded the high levels of dissent.’