Shareholder resolutions related to executive pay that received significant shareholder dissent at the annual general meetings of FTSE 350 companies remained high in 2019, a review by Pensions and Lifetime Savings Association found.
The PLSA review, which analyzes investors voting behavior, said that in 2019 there were 148 resolutions that attracted a 20% dissent from investors at 81 different companies in 2019, compared with 148 resolutions at 82 companies a year earlier.
The report noted that average CEO pay FTSE 100 companies has increased to 117 times the average worker's paychecks today, from about 40 in the mid-1990s, sparking an increase in resolutions made by shareholders because of pay.
However, for 2018, the median pay for a FTSE 100 chief executive has fallen 13% from the previous year to £3.46 million ($4.5 million). A number of companies also preemptively reduced bonuses, executive pension entitlements or overall salary ahead of the 2020 AGM season, PLSA found.
Caroline Escott, policy lead for investment and stewardship at PLSA, called on pension funds to hold directors individually accountable on issues of continued concern in 2020.
"For instance, in cases where investors feel that the agreed executive pay packages are not aligned to long-term performance, we recommend that pension fund investors vote against the re-election of remuneration committee chairs responsible for pay practices alongside voting against the remuneration policy or report," Ms. Escott said.
Pension funds should consider how to best make use of engagement, Ms. Escott said, including seeking additional meetings with company management or collective engagement with other investors.
