May’s attempt to prevent fat-cat City pay bashed

The first register of investor rebellions against Footsie companies was on Tuesday attacked as a “blunt instrument” which would fail to curb City pay.

The Investment Association, which represents the UK’s £7 trillion funds industry, published a register of FTSE-listed companies including Burberry, Sky, Sports Direct and WPP who have suffered shareholder votes of 20% or more against pay and other policies.

The register is part of a government push under the Prime Minister, Theresa May (pictured), to increase corporate governance and transparency but consultants fear the mechanism is ill-equipped to the task and could backfire.

“The concern that we have is that the Investment Association is employing a fairly blunt instrument — the 20% threshold — and it will actually prevent companies to come up with more innovative approaches,” said New Bridge Street’s Andrew Page.

“The danger here is that it might have unintended consequences. It could lead to a herd mentality which would not be good for companies or their shareholders. What we need is to encourage a richer dialogue with shareholders on executive pay.”

One in five of the 640 FTSE All-share companies who held annual meetings last year feature on the list because of having one resolution which received a rebellion of 20% or more. Pay disputes prompted the highest number of votes against, with four in 10 businesses on the register appearing because of concerns over remuneration.

Investment Association chief Chris Cummings defended the register and said the volumes of names on the list was a “wake-up call” for the City.

“There has been a view that companies can ignore the views of shareholders. Shareholder rights are going to be given even more prominence.

“We see this as a great opportunity to increase transparency and accountability,” he told the BBC. The Government asked the IA to compile the register in September after a consultation aimed at beefing up corporate governance.

The IA subsequently wrote to all companies which had at least one resolution rejected, asking them to respond publicly.