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Shareholder rebellions over executive pay surged at UK companies in 2019

Edmund Heaphy
Finance and news reporter
Shareholders at 31 FTSE 250 companies brought motions over executive pay in 2019. (Getty)

Shareholder rebellions against executive pay climbed by 29% at mid-market UK companies last year, as investors pushed companies to reconsider bumper payouts for top bosses.

New analysis from the Investment Association, whose public register tracks when a resolution is backed by more than 20% of a company’s shareholders, found that shareholders at 31 FTSE 250 (^FTMC) companies brought motions over executive pay in 2019.

While mid-market companies experienced significant dissent, some 25% of all listed companies saw more than 20% of shareholders back various different resolutions last year, which was only a slight increase on 2018.

“Investment managers are keeping up the pressure on companies to align executive pay with their long-term strategy,” said Andrew Ninian, the director for stewardship and corporate governance at the Investment Association.

“With a quarter of FTSE All Share companies ending up on the Register in 2019, investment managers will be paying close attention this year when companies bring their pay policies to the table to see whether they’ve heeded the high levels of dissent.”

Wetherspoons (JDW.L) chief executive Tim Martin last year attacked shareholders for voting against executive pay packages at his company. Around 6% of investors in the company chose not to support the pay levels.

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Companies like RBS (RBS.L), BP (BP.L), and Babcock (BAB.L) have in recent years faced high-profile shareholder revolts over pension payouts and executive pay.

In May 2019, MPs blasted Lloyds Banking Group (LLOY.L) for its pay and pension packages, calling the 33% pension contribution given to CEO António Horta-Osório “boundless greed.”

Though the contribution is more than double the 13% that other employees get, only 10% of shareholders voted against the payouts.

Around a third of the UK’s top 100 companies last year committed to cutting the pensions of their executives amid investor anger.

Some 30 companies listed on the FTSE 100 said they made “significant changes” to pension packages, the Investment Association said in August.