Yahoo Finance Fidelity Chief Backs May's Pay Crackdown
One of the City's top investors is to come out in support of Theresa May's plan for a crackdown on City pay that will give investors a binding annual vote on big boardroom reward packages.
Sky News has learnt that Dominic Rossi, the chief investment officer at Fidelity International, will declare on Wednesday that the new Prime Minister's proposal will "add significant momentum to efforts to better align...rewards with shareholder interests".
Mr Rossi's comments will make Fidelity, which manages more than £185bn for clients, the most prominent institutional investor so far to publicly support Mrs May's aspiration.
But he also believes that a new binding annual pay vote must be forward-looking, rather than relating to remuneration packages already handed to top executives.
Sir Vince Cable, who was the architect of the current system of binding votes every three years at Britain's largest companies, has already warned that making annual votes retrospective would be fraught with legal risk.
Mr Rossi will give his endorsement to the new PM's plan alongside a progress report on Fidelity's efforts to ensure that long-term incentive plans in the UK's top boardrooms do not mature for at least five years.
Figures to be published by the fund management giant will show that Fidelity's campaign has yielded significant results, with 48, or almost half, of the FTSE-100 now complying.
That compares to just four companies which had five-year vesting for LTIPs in 2013, when Fidelity threatened to vote against those which failed to adjust their pay frameworks to promote longer-term goals.
In the wider FTSE-350, the number of companies with holding periods of at least five years has increased from six in 2013 to 118.
The pace of progress has, however, slowed with just half a dozen FTSE-100 companies joining the ranks of those meeting Fidelity's criteria in the last 12 months.
"The legislation introduced in 2013 gave shareholders a powerful new tool to influence companies' policies on pay," Mr Rossi will say.
"We are delighted with the progress that has been made but of course there is still work to do."
This year's annual shareholder meeting season has seen a deluge of revolts against the boards of companies including Anglo American (LSE: AAL.L - news) , the miner, the oil giant BP and the pharmaceuticals group Shire (Xetra: S7E.DE - news) .
Many investors complain that their views are not being heeded because the annual vote on pay remains advisory only.
Mrs May's Government has not yet outlined whether its plan for a vote every 12 months would relate to the prior year's pay report or the following year's framework.
Sky News has revealed that a group set up under the auspices of the Investment Association, the asset management industry's trade body, is examining whether to recommend a binding annual pay vote in a report to be published next week.
