18 September 2013 by Alexandra Jones
Companies that failed to respond effectively to shareholder concerns about remuneration have been named in a report by the National Association of Pension Funds (NAPF).
NAPF’s analysis of the 2013 AGM season found that while most companies that faced significant shareholder rebellions in the ‘shareholder spring’ of 2012 listened to and learned from concerns, there are still some that have not.
Afren, Immarsat and Babcock are among the 10 FTSE companies highlighted which, having received a warning from shareholders last year, received more than 15% dissent on their remuneration report in 2013.
Afren was the only company so far this year to have its remuneration report voted down by three-quarters of its shareholders.
However, most companies have acted to avoid the reputational damage inflicted by 2012’s high profile shareholder rebellions by engaging more and earlier with shareholders.
They also appear to be cautious about introducing change ahead of the remuneration disclosure regulations and the binding vote on remuneration policy, which come into effect this October.
Joanne Segars, Chief Executive of NAPF, said: ‘The good news is that most companies are making efforts to improve the disclosure of their remuneration practices and to ensure their policies are driving appropriate performance. We are also pleased to see that many companies are responding positively to the increasing expectations of investors for Audit Committees to safeguard the independence of the external auditor.
‘We hope that highlighting the few companies where shareholders have felt compelled to give the company another reprimand will cause them to reflect, listen to shareholder concerns and introduce changes next year. We will continue to keep an eye on them and encourage all companies to assess whether their current remuneration practices align rewards to long-term success and returns to shareholders.’
In March this year, the NAPF wrote to the FTSE 350 chairmen to warn that companies which had failed to create a strong link between executive rewards and performance should expect shareholders in 2013 to repeat their concerns of spring 2012.
It also published new Remuneration Principles which it hopes to see applied from 2014.
The NAPF AGM Season Report is the first in what will be an annual monitoring exercise.