Exclusive: British investors step back from executive pay battle

Thu Jun 20, 2013 7:34am EDT
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By Joel Dimmock

LONDON (Reuters) - Investors in Britain's largest companies have rowed back on the protests over pay which most readily symbolized public distaste over perceived corporate greed during last year's 'shareholder spring'.

Research by Reuters has found that the average vote against executive pay deals at FTSE 100 annual general meetings has fallen by 18 percent from two years ago, even though surveys suggest earnings have continued to rise.

The decline in dissent comes shortly before shareholders acquire new powers to reject compensation policies.

With more than 70 percent of 2013 FTSE 100 AGMs completed, remuneration resolutions have drawn an average 'No' vote of 6.6 percent, down from 7.6 percent for the same companies in 2012 and from 8 percent for all FTSE 100 members in 2011.

As with other stock indexes, the British blue-chip benchmark's composition changes slightly from year to year.

These votes are still advisory, but from October reforms brought in by Britain's business secretary Vince Cable will give shareholders the power to reject any changes to a pay policy at the next company AGM, or to vote down an unchanged policy every three years.

No FTSE 100 pay vote in 2013 has so far seen objections reach the 50 percent threshold which would force a company back to the drawing board. Last year, a majority of shareholders at two companies, WPP (WPP.L: Quote) and Aviva (AV.L: Quote), voted against proposed pay deals for executives.

There is no clear evidence that the decline in voting levels reflects a fall in executive earnings, although some major investors credit efforts by companies to make changes and better engage with shareholders for the fall in protest votes.   Continued...

Pedestrians pass office blocks in the City of London June 19, 2013. REUTERS/Luke MacGregor