FTSE 350 shareholder dissent slows

One in five FTSE 350 companies faced significant shareholder dissent at company AGMs over the past two years, but the longer term trend shows a drop off in challenges since the peak in the aftermath of the financial crisis, according to research by the Pensions and Lifetime Savings Association (PLSA)

Its annual AGM Voting Review examining the results and causes of shareholder dissent for FTSE 350 companies during 2017 identified 117 resolutions attracting significant dissent in 2017, affecting 73 companies.

The equivalent figures for 2016 are 86 resolutions and 64 companies, while in 2012 there were 193 resolutions challenged at 84 companies.

Executive pay awards continue to be the most controversial aspect of corporate governance, with the figures of significant remuneration-related dissent at FTSE 350 AGMs from 2015-2017 consistent with previous years.

The report also illustrates some progress in holding board members to account for flawed executive pay practices at FTSE-100 companies.  In 2016, average dissent levels over remuneration policies were four times higher than dissent over the re-election of remuneration committee chairs as directors. In 2017, they were less than twice as high, suggesting that most shareholders are now voting against the remuneration committee chair if they vote against the remuneration policy.

Luke Hildyard, stewardship and corporate governance policy lead at the PLSA, said: ‘Last year we surveyed our members to find out their views on executive pay – over 85% said they felt pay levels were too high and 87% said they were concerned by pay gaps between executives and the wider workforce.

‘We subsequently recommended that pension fund investors vote against the re-election of remuneration committee chairs responsible for pay practices when voting against their remuneration policy or report.

‘It’s encouraging to see these recommendations are having a positive effect, particularly alongside the fall in executive pay levels recorded last year, but there is still considerable room for shareholder scrutiny of pay practices to improve. We hope to see these emerging trends continue.’

Report by Pat Sweet

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