One fifth of UK-listed firms suffered shareholder revolts in 2017
Excessive pay was one of the most pressing issues prompting shareholder revolts this year.
Britain’s listed companies are being urged to “start listening” and “acting on” shareholder concerns around issues like excessive pay after more than one fifth suffered investor revolts this year.
The Investment Association – an asset management lobby group whose members control £6.9 trillion of assets – has launched a “public register” of UK-listed companies detailing firms that either withdrew a resolution ahead of a vote, or saw at least 20% of shareholders oppose a motion in 2017.
It has resulted in 22% – more than one in five – of the 640 FTSE All-Share companies being listed on the register, including Sky Group, Sports Direct and WPP.
Excessive boardroom pay was one of the most pressing issues, accounting for 38% of the resolutions that were withdrawn or faced notable opposition, while the second most frequent reason for shareholder revolts was the re-election of company directors, accounting for 32%.
Investment Association chief executive Chris Cummings said: “The data gathered for the Public Register reveals the true scale of investor concern and shows shareholders flexing their muscles by exercising their votes.
“With over one fifth of the FTSE All-Share having faced large shareholder opposition in 2017, a significant number of companies need to seriously start listening to shareholder views and acting on them.”
While 31% of companies on the register have already issued a public statement explaining how they are addressing shareholder concerns, Mr Cummings said the association’s members are waiting to see how others respond as they start to “shape their voting decisions for the 2018 AGM season”.
Firms like Pearson have already been given a bloody nose after more than 60% of votes were cast against a 20% pay bump for the loss-making publisher’s chief executive John Fallon, while luxury retailer Burberry saw nearly a third of shareholders vote against generous payouts that include a £5.4 million share award for former boss Christopher Bailey.
Earlier this month, Sky suffered a twin-pronged shareholder revolt over pay and the re-election of chairman James Murdoch at the company’s annual meeting, amid concerns over his role as chief executive of 21st Century Fox, which is attempting to seize control of the 61% of Sky it does not already own in an £11.7 billion deal.
Shareholders also took aim at advertising giant WPP over a £48 million pay package for chief executive Sir Martin Sorrell, with more than 21% of votes cast in opposition, or abstention, on the company’s remuneration report in June.
Just last week, Sports Direct shareholders voted overwhelmingly to oppose Mike Ashley’s attempt to hand his brother and former IT director an £11 million back payment, though it avoided a full-blown revolt by independent investors back in September over the re-election of under-fire chairman Keith Hellawell.
Business Secretary Greg Clark said there was a risk of tarnishing Britain’s business reputation.
He said: “Most companies are proactive and thoughtful in implementing responsible business practices but there are a minority of firms that threaten the world-leading reputation of our business community.
“It is right that we review and refresh our standards to ensure we continue to have the highest reputation.”