Investors' Day of Anger at Executive Pay

Investors intensified the fight against high pay for poor performance in a bruising day for some of Britain\'s biggest companies.

Published: 29th April 2016 08:09 AM  |   Last Updated: 29th April 2016 08:09 AM   |  A+A-

Investors intensified the fight against high pay for poor performance in a bruising day for some of Britain's biggest companies.

As a number of FTSE 100 and 250 companies faced remuneration revolts, Weir Group became the new poster boy for shareholder anger.

The FTSE 100 engineering giant saw the largest rejection of a pay policy since binding votes on bonus plans were introduced two years ago.

Just 19pc of Weir's investor base actively voted in favour of its remuneration plans. More than 72pc of those who cast a vote rebelled against the policy, sending the Scottish group back to the drawing board for next year's executive pay.

The Scottish group, led by chief executive Keith Cochrane, acknowledged that "a majority of shareholders were clearly uncomfortable with a new approach" that would have handed bosses share awards tied to the share price, rather than other goals such as profits, which have taken a battering during a global slump in oil prices in the past two years. "The board looks forward to further engagement with shareholders regarding remuneration," said chairman Charles Berry.

Mr Cochrane was paid pounds 1m for last year, but would have been able to earn up to pounds 3.2m in various cash and share awards under the now-defunct plan.

Hermes, one of the institutional investors that voted down the plans, called on the firm to "apply the test of common sense" to its proposals.

Weir joins a small but growing roll call of companies to be told to redraft their pay plans. The small-cap engineering outfit Kentz was the first to suffer defeat in 2014, when 51pc voted down its remuneration policy, shortly after then-business secretary Vince Cable introduced a binding vote at least once every three years.

Shareholders flexed their muscles again yesterday (Thursday), with investor unease bubbling over into a series of showdowns with company boards.

Shire, the FTSE 100 Dublin-based drugs group, narrowly won approval for boss Flemming Ornskov's 25pc pay rise to pounds 14.8m, after enduring a 49.45pc vote against its remuneration report.

Over at CRH fewer than four in ten shareholders supported its remuneration policy, although the FTSE 100 construction group won approval due to the high number of abstentions. The company, which is listed in London but headquartered in Ireland, has increased the maximum bonus for its executives to 590pc of their salary.

Schroders, the wealth management firm, also suffered a knock when almost 15pc of investors dissented on the election of long-standing boss Michael Dobson to the role of chairman, flouting governance rules, while Countrywide, the estate agent, suffered a 20pc vote against its remuneration report.

They join the ranks of shareholder rebellions that this year include large protest votes at Anglo American and BP, whose lacklustre profits jarred with rising pay for their most senior staff.

Greater success was had at Barclays which won support from at least 90pc of its voting shareholders on all resolutions, while Tullow Oil, which had faced opposition from Hermes and other investors, found that just 9.3pc of investors rejected its pay report. FTSE 250 car company Pendragon saw 7.43pc of its investors vote against pay.

In the coming weeks, shareholders are preparing to raise concerns about pay at WPP, Reckitt Benckiser and Standard Chartered.

WPP boss Sir Martin Sorrell defended his pounds 70m pay packet, saying he was "not embarrassed" by his success in expanding the company he founded.

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