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Investors increase pressure over executive pay

Executive_payInvestment managers stepped up the pressure on investee firms in 2019, with executive pay and director re-election continuing to top the list of main concerns.

Through the course of the year, 158 firms were added to the Investment Association’s public register, which tracks FTSE All-Share companies that receive more than 20% of votes against a resolution at an annual general meeting or general meeting.

According to the IA, a vote of over 20% marks a significant shareholder dissent as investment managers look to hold companies to account to ensure they provide long-term returns for savers.

A quarter of the FTSE All Share companies landed themselves on the IA’s public register, with a total of 298 individual resolutions being added in 2019. This marked a slight increase on 2018 in which 151 companies and 294 resolutions were added to the register.

Nearly 40 companies appeared on the register for the same resolution in both 2018 and last year, the UK’s funds industry trade body said.

Over 60 companies appeared on the register for pay-related resolutions, showing that executive pay remained a key issue.

Opposition to individual director re-election also continued to be important with the number of resolutions against individual directors remaining constant at 103 in 2019 compared to 105 the previous year.

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

“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,” he added. 

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