Continuing 2017 Trend, Executive Pay Remains Top Concern for UK, EU Shareholders
January 12, 2018
Executive pay will continue to be a top-tier issue for European investors of EU and UK companies for 2018, according to an article from the Financial Times. The article cites a report from the UK’s Investment Association, a trade association for the UK asset management industry which found that “significant shareholder rebellions” over pay broke out at more than 20% of the 640 FTSE All-Share companies in 2017. In 2017, the Investment Association (IA) began keeping a register of companies with proposals which experienced “a high vote against” or those who withdraw a resolution, presumably in fear of shareholder pushback. According to the data on the register, nearly 40% of the resolutions listed on the IA’s register pertained to executive pay. The register, according to IA, is aimed at providing attention on how companies respond to investor pressure on issues like executive pay. The Financial Times reports that almost 31% of companies have provided a response to the register.
This past August, the newly formed UK government coalition led by Prime Minister Theresa May dropped plans to implement its own register which would have displayed a list of companies who failed to gain at least 80% support. Outside groups, like the IA, appear to have taken up the mantle with their own registers. Outside of the UK, attention to high pay has also been percolating. In Switzerland, which saw several initiatives a few years back aimed at lowering pay, asset management group GAM faced a wholesale investor revolt over their pay practices which caused the company to create a fixed CEO salary and cap the bonus pool of its management board as well as implement executive stock holding requirements. The framework, according to GAM, is a result of the investor interactions and engagement they had in the past year.