Shareholder voices heard loud & clear
The shareholder spring picked up pace yesterday, when investors voted against boardroom pay rewards for engineering firm Weir Group and Shire, the FTSE 100 pharmaceutical group.
The revolts came on the back of major uprisings at oil giant BP, miner Anglo American, energy firm Centrica and financial behemoth Citigroup.
“This year has seen a ‘spring of discontent’ for a number of major British companies, with shareholders demonstrating their unhappiness at the remuneration packages awarded to top executives last year at a time when company performance was lacklustre at best,” said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management.
Read more: Round two of shareholder spring?
More rebellions are set to follow, with AstraZeneca the next company to face potential investor ire today. Shareholder advisory firm Pirc has advised shareholders to vote against a £8.4m pay award for Pascal Soriot, the pharmaceutical giant’s chief executive.
Investor Royal London Asset Management revealed yesterday that it would be voting down remuneration reports at Standard Chartered’s and Reckitt Benckiser’s AGMs next week.
The events are reminiscent of those in 2012, when a number of companies including Aviva, Trinity Mirror and WPP faced significant shareholder revolts.
Yesterday, Weir Group’s directors’ future remuneration policy attracted a 72.4 per cent “No” vote against it because the majority of the potential award for chief executive Keith Cochrane, although reduced, was not linked to performance.
The rejection of the policy means that the engineering company cannot implement its executive reward plans for 2016 onwards as hoped.
Read more: BP pay revolt grows after Dudley gets a bloody nose
“To focus on creating value over the long term, we believe that the company should have performance targets and apply the test of common sense if these prove to be unrealistic due to unanticipated market conditions,” wrote Dr Hans-Christoph Hirt, co-head of shareholder advisory firm Hermes EOS, about Weir.
Shire also came to blows with shareholders over pay yesterday, with 49.5 per cent voting against the directors’ remuneration report.
Read more: Sir Martin Sorrell defends £63m pay package amid fears of 2016 shareholder spring
The pharmaceutical company’s 25 per cent salary increase for chief executive Dr Flemming Ornskov to $1.7m (£1.2m) had left a number of investors disgruntled, particularly as the rise was in addition to maturing long-term investments of $16.8m.
“We believe that an incremental approach to salary rises is more appropriate and should reflect shareholder value creation over the longer term,” remarked Hermes’ Dr Hirt.
Shire said it had engaged with investors and acknowledged the result of the vote.