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Anglo Latest Victim of Growing FTSE Pay Revolt

Anglo American became the latest company to fall foul of disgruntled investors as the so-called Shareholder Spring against governance.

Published: 22nd April 2016 08:21 AM  |   Last Updated: 22nd April 2016 08:21 AM   |  A+A-

LONDON: Anglo American became the latest company to fall foul of disgruntled investors as the so-called Shareholder Spring against governance at the top of some of Britain's biggest companies intensified.

The FTSE 100 miner saw 42pc of those who shareholders who voted at its annual general meeting in London yesterday (Thursday) did so against the company's remuneration report.

The "no" vote - centred on chief executive Mark Cutifani's pounds 3.4m pay packet - is the second largest to date in the current AGM season, behind only BP, where 59pc of shareholders voted against Bob Dudley's pounds 14m compensation.

The protest came on the same day as the Investment Association, whose members own approximately one third of the FTSE 100, said that the system used to set top City pay is "widely...broken".

In an interim report on executive remuneration, a group led by Legal & General chief executive Nigel Wilson said: "The current approach to executive pay in UK listed companies is not fit for purpose, and has resulted in a poor alignment of interests between executives, shareholders and the company."

The group called for "greater transparency" and "clearer alignment of shareholder, company and executive interests".

LGIM, the investment arm of L&G, was one of the ringleaders in the vote at Anglo, voting its 2.9pc of issued share capital against the pay report, blaming the "lack of discretion exercised by the remuneration committee to scale back" long-term share plans.

Mr Cutifani's total remuneration for 2015 was actually less than the pounds 3.7m he took home the year before. His basic salary rose 2pc to pounds 1.26m while his bonus slumped by 38pc to pounds 966,000.

Including pensions and other contributions, Mr Cutifani was eligible for just 36.5pc of his available bonus. However, shares vesting in his long-term performance plan paid out pounds 778,000, topping up his pay and antagonising shareholders.

At the same time, Anglo's share price plummeted by 70pc in 2015 and it reported a $5.5bn (pounds 3.8bn) loss for the year thanks to the slump in the commodities cycle.

Bruce Duguid, director at institutional investor Hermes, said it had not supported the remuneration report, due to the roughly tripling of shares released under the long-term incentive plan for 2015.

"In the light of the value creation experienced by long term owners in recent years, we are concerned about the resulting potential future reward to directors," said Mr Duguid.

Anglo was not the only company to see a pay protest yesterday, however.

RELX - the FTSE 100 business information group formerly known as Reed Elsevier - saw 14.3pc of those who voted do so against its pay report, while 8.75pc did so at FTSE 250 defence specialist Meggitt.

The run of protests is likely to

continue today when shareholders of HSBC gather in London, with some concerns over pay and succession planning.

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