Nearly a quarter (22%) of the UK’s top 30 firms received less than 80% support for their remuneration reports this year, according to Deloitte’s latest executive pay report. The figure is up from only 6% last year.
The increase in dissatisfaction amongst shareholders follows proxy agencies issuing eight recommendations to vote against or abstain from voting on top 30 firms’ remuneration reports in 2018 – significantly higher than the two against recommendations issued in 2017. This is despite median CEO pay levels falling slightly and average share prices rising in the top 30 firms.
In comparison, in the FTSE 100 as a whole, 14% of companies received less than 80% approval, versus 8% in 2017 this year.
There were 14 recommendations from proxy agencies to vote against or abstain remuneration resolutions in the full FTSE 100, compared to 10 in 2017. Eleven of the fourteen companies who received a vote against or abstain from the proxy agencies received less than 80% approval which shows their influence.
Of those firms receiving lower votes on remuneration, four were ‘repeat offenders’ – firms who also received low votes last year.
Stephen Cahill, vice-chairman at Deloitte, said: “Despite a quieter AGM season last year, the 2018 season has shown that executive pay remains an area of shareholder focus. We have seen a much more challenging voting season, in particular for FTSE 30 companies, despite it not being a policy year for the majority. This reflects a tougher stance taken from proxy agencies in respect of the largest companies, as well as continued pressure on repeat offenders.
“Shareholders and proxy agencies are increasingly hardening their line not just on pay levels, but where companies are failing to act on previous concerns, in particular around transparency of pay arrangements,” he added.