Shareholder Revolts Hit The FTSE

Bosses of FTSE companies are increasingly facing the wrath of shareholders, as they become increasingly angry with issues such as the behaviour of company directors, pay, diversity and performance.

Disputes Rise 25%

The Investment Association analysed AGM votes and found that over the past year, shareholder revolts concerning major decisions rose by 25%, with 237 revolts in the first six months of 2018 alone.

In particular, many of these revolts focused on the refusal to re-elect directors, which the IA suggested was usually as a result of poor performance, though in many cases there were concerns when it was felt that an individual had spread themselves too thinly over many boards.

Excessive Pay

Pay was also a major theme in the analysis, with at least 18 revolts against pay. In July this year, BT faced a shareholder rebellion over the £2.3 million pay of its outgoing chief executive, at a time when 13,000 job cuts were announced to save costs. Other companies that faced votes against pay were Royal Mail, Astra Zeneca and advertising firm WPP.

In total, the number of rebellions over pay doubled from last year.

Andrew Ninian at the IA asked firms to recognise when high votes against them had happened, and set out, within six months, what they were going to do to as a result of the shareholder concerns.

However, not all firms have listened, as there were 29 repeat offenders that faced rebellions this year and last over the same topic, 14 of which were pay related.

Government Action

Business minister Kelly Tolhurst highlighted government plans to make businesses more “transparent and accountable“.

Under the new government rules, firms that lose shareholder votes at AGMs will have to issue an immediate statement, then another six months later, explaining exactly how they have addressed the shareholder concerns and actions they will take going forward.

She continued: “[This] is one of a package of reforms by the government to upgrade our corporate governance, including board diversity and CEO pay ratio reporting, to make our largest companies more transparent and accountable to their staff and shareholders.“