THIS is a rotten year to be a chief executive. The impact of new regulations introduced by the
Even the example of firms that successfully passed resolutions on pay will have brought little comfort to
And executives will no doubt feel shareholders are doing them a disservice. According to a pay survey by proxy adviser Manifest and consultants MM&K, total remuneration awarded in 2013-14 was down 7 per cent from the previous year - more than the 5 per cent decline observed the year after the shareholder spring.
Even so, there is widespread confusion about executive pay, and the government's insistence on a single total figure of remuneration has done nothing to assuage this. According to data reported using this Single Figure, pay has increased 3 per cent on last year, while many newspapers reported a 15 per cent rise. But this is likely to be a bad indication of remuneration committees' intentions, dependent as it is on stock market performance.
Most smart investors realise their voting behaviour is weighing down on executive pay. In fact, they are setting ever tougher standards. Fidelity, for example, is using its voting power to press for five-year Long-Term Incentive Plans (LTIPs), in place of three years.
All of this is a nightmare for chief executives and boards, who fear losing talent to US companies as
The risks of not making an effort to win over institutional investors should be clear. Besides further political interventions and shareholder rebellions, firms risk attracting more aggressive activists. Last month, Sandell Asset Management said it would vote against
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