Raymond Doherty 22 Nov 2018 10:25am

Companies ignoring concerns over executive pay

A rise in shareholder rebellions on executive pay during the 2018 AGM season should come as no surprise, according to the Investment Association (IA)

A total of 61 companies were added to the IA register of shareholder revolts for pay-related resolutions, nine more than in the same period last year. Of the 61, around a quarter (15) were FTSE 100 companies, 23 were FTSE 250 companies and 23 were FTSE small cap companies.

Businesses continue to ignore or sideline the concerns of investors, said the IA. It has written an open letter to the chairs of remuneration committees of FTSE 350 companies about the growing frustration.

Additionally, it has set out an updated corporate governance code that it expects companies to follow, which includes; making pension contributions equal; broadening the remit to claw back bonuses; make directors hold on to shares a for longer period after they depart business; and adopt new pay ratio reporting requirements early.

"While the vast majority of FTSE 350 companies develop and implement pay policies that align with savers and shareholders’ interests, a stubborn minority still do not respond to shareholder concerns.

“Our strengthened guidelines make clear that companies need to demonstrate more robustly the link between pay and company performance. If they don’t, they should brace themselves for more shareholder revolts in 2019,” said Andrew Ninian, director of stewardship and corporate governance at the IA.

Yesterday it was revealed that Denise Coates, the head of gambling group Bet365, was paid £220m last year.

Last month Jeff Fairburn agreed to step down as group CEO of Persimmon at the request of its board due to the “distraction” caused by his £75m remuneration packet.

According to research published in August, median pay among FTSE 100 CEOs rose 11% between 2016 and 2017 and is now at £3.93m per year, despite the increases in shareholder revolts.