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The UK’s largest firms have listened to shareholders and begun to rein in spiralling executive pay, according to new data.
Many FTSE100 companies who saw large shareholder votes against pay in 2016, have submitted “more conservative” pay policies in 2017 for their executive teams, according to information gathered by the Investment Association, which represents institutional investors.
This has resulted in a 35 per cent drop in the number of pay proposals that saw more than 20 per cent of shareholder votes cast in opposition to those resolutions, compared to last year.
Investment Association chief executive Chris Cummings said: “Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account.
“Executive pay amongst the UK’s largest companies is starting to decline to a level more in line with shareholder expectations.”
The pay of FTSE 100 bosses had already fallen from an average of £5.4m in 2015 to £4.5m in 2016, according to the High Pay Centre think tank and the Chartered Institute of Personnel and Development.
A large number of firms saw significant numbers of shareholders vote against remuneration proposals last year.
Sir Martin Sorrell of WPP, Bob Dudley at BP and Mark Cutifani at Anglo American all faced an investor backlash over ballooning pay.
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BP reduced Mr Dudley’s pay package by 40 per cent after a majority of shareholders voted down a proposed 20 per cent hike depsite the company slumping to its largest annual loss for more than 20 years.
Chris Cummings, chief executive of the Investment Association, said: “Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account.”
He said there was still, “some way to go, but a strong signal has been sent to boardrooms around the country that investors won’t tolerate rewards that are out of line with company performance and have concerns about executives’ spiralling pay”.
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