This year, the PLSA’s annual review of the votes at UK company AGMs examines the issue of executive remuneration, lending some concrete data to the lively debate currently taking place on this issue. The report includes an analysis of remuneration-related votes at company AGMs, as well as the results of a PLSA survey looking at the views of pension fund investors on executive pay.

Findings include:

• For the FTSE 100, average dissent on remuneration report and policy votes was just under 11 per cent. For the FTSE 250, the figure was almost 7 per cent. These figures are similar to previous years.
•  Fifteen FTSE 100 Companies and twenty seven FTSE 250 companies recorded significant levels of dissent on remuneration-related votes. In 2015, the figures were fifteen and thirty five respectively.
•  Of the five FTSE 100 companies with the highest level of dissent on a remuneration-related vote in 2016 (BP, Smith & Nephew, Shire, Babcock and Anglo-American), none clearly acknowledged that they had got their approach to remuneration wrong in their subsequent statements addressing the votes. There is some room for improvement in terms of how responses to high levels of dissent are disclosed and detailed.
•  87 per cent of pension funds responding to a PLSA survey said they felt that executive pay was too high. Of those, 63 per cent said it was generally too high, while 37 per cent said it was too high in cases of poor performance. 85 per cent of respondents said they were concerned by pay gaps between executives and their workforce.
• 60 per cent of respondents felt that pay levels in the asset management sector prevented asset managers from holding companies to account over pay, while 20 per cent did not.

The report argues that boards must do more to heed shareholder concerns over executive pay. For our part, the PLSA will shortly update our Corporate Governance Policy and Voting Guidelines, to provide stronger, clearer guidance for our members on holding companies to account regarding their pay practices.