How 1 in 10 top firms, including Morrisons and Rio Tinto, have been hit by backlash from investors over fat cat pay
- An analysis by The Mail on Sunday used data from shareholder advisory service ISS Corporate Solutions
- The study of more than 1,000 listed companies shows that 9 per cent of firms saw more than one in five votes cast against executive pay packages
- This was up from 5 per cent in 2020 and 7 per cent in 2019
The bosses of Britain’s biggest companies face a growing backlash from shareholders over their huge pay packets, research has shown.
One in ten firms in the FTSE AllShare index received a scolding from investors in 2021, according to an analysis by The Mail on Sunday of data from shareholder advisory service ISS Corporate Solutions.
The study of more than 1,000 listed companies shows that 9 per cent of firms saw more than one in five votes cast against executive pay packages at their annual general meetings, up from 5 per cent in 2020 and 7 per cent in 2019.
Rio Tinto saw 61 per cent of votes cast against a $55million (£41million) pay package for top executives, after the miner destroyed sacred Aboriginal rock shelters in Australia in 2020
The vast majority of companies experience little or no dissent on pay at their AGMs as many institutional investors typically passively vote the policies through. However, the research showed a significant portion of firms listed on the Stock Exchange suffered a backlash and five failed to get their resolutions past shareholders at all.
They were Morrisons, mining titan Rio Tinto, exhibitions group Informa, gold miner Petropavlovsk and software firm Ideagen. Rio Tinto saw 61 per cent of votes cast against a $55million (£41million) pay package for top executives, after the miner destroyed sacred 46,000-year-old Aboriginal rock shelters in Australia in 2020.
However, the vote was a ‘non-binding’ advisory so the executives will still receive the windfalls. Premier Inn owner Whitbread and drinks bottler Coca-Cola HBC this month said they had spoken to their largest investors to gauge sentiment after suffering AGM revolts.
Several companies – including AstraZeneca, gambling firm Playtech and safety inspection group Intertek – suffered repeat shareholder rebellions. Luke Hildyard, a director at the High Pay Centre think-tank, said: ‘It’s encouraging to see investors using their AGM votes to hold companies to account. Engagement with companies over pay is meaningless if shareholders aren’t prepared to say “no” when boards are unwilling to see reason.’
At the onset of the pandemic, a host of FTSE bosses slashed their pay to show solidarity with workers, some of whom had a reduced wage packet. But the MoS revealed that by autumn 2020 many business leaders, including the bosses of Wetherspoons and easyJet, had quietly hiked their pay back up.
Hildyard said: ‘The increased number of pay revolts this year also suggests that after taking pay cuts during the first outbreak of Covid-19, CEOs now expect pay awards to return to the level to which they feel entitled. ‘Given the uncertainties facing businesses, it seems reckless to be spending huge sums of money on already wealthy executives.’
Investors were also angered by bonuses to bosses at firms that have received state support during the pandemic, such as estate agent Foxtons and car dealership Pendragon. FTSE 100 bosses were paid £2.69million on average in 2020. That was down 17 per cent compared with the £3.25million in 2019 but still 86 times higher than the £31,000 average annual UK wage.