‘No’ votes on pay average 6.6 percent so far in 2013, down from 7.6 percent last year
Votes against executive pay deals in the UK have fallen for the last couple of years, despite continued compensation increases, as public outrage over perceived exorbitant pay packages subsides, according to research by news agency Reuters.
The average vote against executive pay at FTSE 100 companies dropped by 18 percent in the last two years, according to the study, based on results from the 2013 AGMs of more than 70 percent of the companies. ‘No’ votes on executive pay packages have averaged 6.6 percent so far this year from 7.6 percent last year and 8 percent in 2011, the agency says. At the same time, the number of abstentions dropped to 2.2 percent so far this year from 2.4 percent in 2012 and 3.6 percent in 2011.
While the number of ‘no’ votes and abstentions declined last year, executive pay has increased by more than 10 percent since 2011, according to a study by consultancy MM&K and proxy voting firm Manifest. The result therefore shows the lower level of shareholder dissent is unlikely to stem from actual changes to corporate executive pay policy.
While the votes so far are only advisory, the decline in ‘no’ votes on executive pay comes before new regulation gives shareholders the right to reject changes to pay policy at AGMs and vote down existing pay policy once every three years.
Angeli Benham, the UK corporate governance manager at Legal & General Investment Management who lobbied against pay deals she saw as excessive in the past, says the decline in ‘no’ votes and abstentions is a result of recent pay battles, such as the majority ‘no’ votes against executive pay proposals at WPP and Aviva last year.
‘A lot of the companies I worked against last year did come and chat to shareholders and most of them have made significant changes to their remuneration,’ Benham tells Reuters. ‘Other shareholders are now engaging more with companies... and companies that haven’t engaged with us in the past are coming forward.’
A freshly released survey of UK investors by the Investment Management Association (IMA) shows investor engagement with the companies they invest in increased last year over 2011. The most common subject of the engagement, according to the IMA, is pay.
