Shareholder rebellions on executive pay – NAPF report

The National Association of Pension Funds (NAPF) has published its third report on shareholder action at the AGMs of large corporations, including details of incidences where investors have sought to question the compensation of executives or expressed discontent with wider governance and stewardship at companies. In the 2015 AGM ‘season’, there were 12 companies in the FTSE 350 where shareholders expressed discontent with a particular governance arrangement for a second successive year.

  • Around a third of investors expressed discontent in both 2014 and 2015 with the provisions of a new remuneration structure at ICAP Plc, which is deemed excessive in comparison to peers and previous arrangements, according to the NAPF.
  • At Tullet Prebon, 43.7% of investors disagreed with a discretionary bonus awarded to a new chief executive.
  • The NAPF also produces a ranking of the ‘top 10’ shareholder remuneration rebellions; Intertek Group tops the table with 52.1% of shareholders rejecting a remuneration report guaranteeing a bonus for an incoming chief executive.
  • Wm Morrison Supermarkets is in second place in the 2015 ranking; 42.3% of shareholders rejected a report outlining exit payments made to a former chief executive.

Will Pomroy, NAPF policy lead for governance and stewardship, said:

‘As ever, the issue of executive pay continues to attract a great deal of attention and often acts as a lightning rod or proxy for other wider governance concerns. In the current economic environment it is encouraging to see that some restraint on pay has continued this year with a third of CEO salaries being frozen, bonus opportunities and awards remaining static and LTIP opportunities and awards increasing only slightly. That said, we continue to believe that too many remuneration structures are unnecessarily complex and in many cases there remains insufficient transparency around bonus targets, which is frustrating and doesn’t help build confidence in the outcomes.’
‘NAPF 2015 AGM Season Report’, National Association of Pension Funds, published September 2015. To download the NAPF report in PDF format click here: www.plsa.co.uk/PolicyandResearch/DocumentLibrary/~/media/Policy/Documents/0444-2015-NAPF-AGM-Report.pdf