The myth of shareholder stewardship

By 02.05.19PublicationsAugust 27th, 2020No Comments

new HPC analysis shows investors are not interested in tackling inequality and excessive executive pay

Measures introduced by the coalition government giving shareholders the power to tackle excessive executive pay have flopped, according to HPC research

So-called ‘say on pay’ reforms gave shareholders new powers to veto pay policies in votes at company AGMs. However, our analysis found that between 2014 and 2018- the first five full years of the ‘say on pay’ regime – every single FTSE 100 company pay policy put to AGMs was approved by shareholders.

The research also found that:

  • Across more than 700 pay-related resolutions voted on at AGMs over the same period, the average level of shareholder dissent was just 8.8%.
  • Only 11% of pay-related resolutions attracted ‘significant’ dissent levels of over 20%.
  • Only 6 advisory votes on the pay packages awarded in previous years were defeated over the period, barely 1% of the total. The average level of dissent was 9.3%

The findings come despite median levels of CEO pay reaching £3.9 million in 2017 (the most recent year for which full figures are available) an increase of 11%. This is approximately 137 times the annual salary of the typical UK worker. Polling has repeatedly shown public support for more meaningful measures to address very high pay and economic inequality, including caps on top pay and worker representation on company boards, and our research will strengthen the case for such measures.

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