Repeat FTSE offenders on excessive pay named

In the week the new corporate governance code has tightened up the rules about devising and reporting on remuneration policies, the National Association of Pension Funds (NAPF) has named eight companies that have failed to take seriously shareholder concerns on pay

The NAPF’s second Annual General Meeting (AGM) season report shows that the trend for shareholder dissent on corporate pay packages is heading downwards, but warns of ‘flash points’ at high profile companies.

The report looks in particular at those companies which received successive years of dissent on remuneration (defined as more than 20% dissent in 2013 and more than 15% dissent again this year. 

Last year 28 companies in the FTSE 100 and FTSE 250 were subject to significant investor concern on this issue. 

By mid-August this year, eight of these companies had received further criticism from their investors with respect to either their policy or its implementation.

The NAPF list includes Capital & Counties Properties, EasyJet, FirstGroup, Lonmin, Mitie Group, Ocado Group, Ophir Energy and SVG Capital.        

Will Pomroy, NAPF’s corporate governance policy lead, said: ‘To receive significant shareholder dissent on remuneration one year might be regarded as a misfortune, but to do so a second year really does not reflect well. We urge all those firms whose shareholders have so clearly signalled their dissatisfaction this year to begin in earnest a conversation to resolve the concerns well ahead of next year’s AGM season.’                              

The report also considers whether the latest audit reports issued in 20013/14 have met the new rules requiring auditors to provide more specific comment on the company, including the materiality level applied in the audit, scope of the audit, and particular audit risk areas.

NAPF also commended KPMG for its work on the external audit report for Rolls-Royce, which was a highly detailed, but concise, report and followed the new format with very targeted investor information. The Rolls- Royce annual report 2013, issued 12 February 2014, is available here

Pomroy said: ‘The enhanced auditor reporting requirements appear to have achieved the almost impossible task of keeping both investors and companies happy. The audit report is critical in allowing the auditor to communicate clearly with a company’s shareholders, who in effect are the end-client. 

‘This was the first year under the new standard and KPMG’s work led the field this year.  

'We look forward to further improvements from them and the other audit firms next year to support a new and valuable conversation between auditors, audit committees and investors.’   

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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