Executive pay was a high profile issue in 2012, with interest heightened by the impending changes in remuneration reporting legislation. It brought the possibility of a binding vote on exit payments, employee representatives sitting on remuneration committees and a higher voting requirement for remuneration resolutions to be passed. Such changes were against a backdrop of shareholders having been accused of not exercising their stewardship responsibilities and allowing companies a free hand to increase executive pay.
During the year we saw evidence of shareholders coming together and voicing their concern with companies that continued to pay less attention to the changing environment or their own faltering performance and yet continuing to try to push through substantial pay increases. The collective involvement of shareholders resulted in a number of CEOs stepping down due to a high protest vote. It was a signal to companies that shareholders were collaborating more to ensure excessive pay for poor performance was a thing of the past.
In 2012, we voted against 126 remuneration-related resolutions and 22 remuneration committee chairman in the UK. We have actively participated in numerous industry consultations, including the Department for Business Innovation and Skills (BIS) ‘Executive Remuneration’ consultation. We pushed for pay packages to be simpler, aligned with shareholder interests and to support the long-term strategy of the business.
See our (Download PDF:) economic and investment commentary (PDF).