Schemes engage as FTSE 100 remuneration dissent voting triples

Remuneration-related dissent voting by shareholders of FTSE 100 firms almost tripled from 2017 to 2018, as pension schemes look to actively “encourage companies to behave responsibly”, according to the Pensions and Lifetime Savings Association (PLSA).

The number of remuneration-related FTSE 100 resolutions which attracted “significant dissent” rose from eight in 2017 to 22 in 2018, while 2018 figures for FTSE 250 firms remained “broadly consistent” to those across 2015-2017.

The PLSA report published today, 29 January, found that the total number of resolutions across the FTSE 350 which attracted "significant" dissent, over 20 per cent of votes against, is at a five year high, 26.4 per cent higher than in 2017.

PLSA policy lead of investment and stewardship, Caroline Escott, said: “Pension schemes hold key stakes in FTSE 350 companies and it’s right that they use their influence as owners to encourage companies to behave responsibly.

“Issues like executive pay and over-boarding are important for investors and, although there is no room for complacency, it’s good to see this increasingly reflected in the findings.”

The report, which looks into the dissent levels at annual general meetings (AGM) since 2008, also found that around one quarter of both FTSE 250 and FTSE 100 companies experienced dissent on at least one resolution at their AGM.

In November, the Investment Association (IA) said that company bosses risk shareholder rebellion unless pension contributions fall in line with the rest of the workforce.

In an open letter to the chair of the remuneration committees of the FTSE 350 companies, IA director of stewardship and corporate governance, Andrew Ninian, wrote: “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."

According to the PLSA's report, shareholders also became more vocal regarding the “over-boarding” of directors, where directors hold multiple appointments.

The PLSA has published its Corporate Governance Policy and Voting Guidelines for UK pension schemes, in the hope the sector will become better informed as they enter 2019’s AGM season.

“The guidelines should help investors in making positive contributions to change and influence corporate behaviour,” Escott added.

Last year, The Pensions Regulator announced that it will be targeting 50 schemes that it will “probe” over “excessive” payments, but added that it must “get the balance right” when writing to schemes over their dividend payments.

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