The rising number of full or partial pay revolts by investors in recent days appears to indicate a developing trend in which perceived discrepancies between performance and executive pay are coming under enhanced scrutiny. In a recent poll the Society carried out of our in-house members, 77% felt that they expected to be involved in discussions with investors regarding executive remuneration. Meanwhile, in our consultation response to BIS on Executive Pay: Shareholder Voting Rights, we stated our position that we support the idea in principle of a binding vote on future remuneration policy as a way of building openness and commitment into the remuneration framework, while raising a number of caveats relating to the risk of making UK company remuneration packages uncompetitive with the potential consequence of difficulty in attracting talented management that could help deliver additional shareholder value.
Are we witnessing a 'shareholder spring' as the press has dubbed the recent pay revolts? This seems a touch fanciful; after all, investors are not protesting levels of pay per se - rather high pay deemed contrary to performance. Nevertheless, this is a significant corporate governance development of its time, and one that many IROs consider they will be in the midst of in the months ahead.
Published: 10 May, 2012