Summer of discontent looms over bonuses
A SUMMER of discontent over the pay of top executives looked more likely last night, as pressure groups urged shareholders to reject plans to pay vast bonuses for under-performance.
Bailed-out bank Lloyds Banking Group and telecoms giant Cable & Wireless are next in the firing line over pay, as both have impending shareholder meetings that allow “no” votes on remuneration to be lodged.
A spokesman for the UK Shareholders’ Association (UKSA) said it is “strongly urging” voters to reject Lloyds’ directors’ pay package at its shareholder meeting on 5 June.
He said the UKSA wants to write to all shareholders of Lloyds to urge “no” votes but the bank is stalling over giving it the investors’ details. He added that while there are some “token gestures” in the bank’s latest pay plans, “the proportion of bonuses in total remuneration is still much too high”.
Cable & Wireless faces similar calls for shareholders to reject its pay plans at its meeting on 17 July, after it emerged on Tuesday that its Europe, Asia and US chief executive John Pluthero is to get an £8.3m bonus.
The Association of Investment Companies, which represents funds that hold billions of pounds worth of stocks, said it would “urge investors to pay attention to remuneration and other issues of concern”.
Alan Brett, head of research at proxy vote provider Manifest, which advises FTSE 100 investors on how to vote at shareholder meetings, said pay dissent has nearly doubled to 15 per cent this year compared to 2008.
“The previous year’s increase was only a per cent or so. We will see similar levels of dissent in the FTSE 100 over the coming months,” he said.
The row comes after Tuesday’s fierce shareholder opposition to rising pay, with shareholders of Shell and Next issuing protest votes. But the votes are only advisory and firms do not have to respect the result.