Investors in UK companies bared their teeth over the last two weeks to express their anger at how executive pay seems to bear no relation to the performance of the company.
The trend continued today as car dealers Pendragon and media group Trinity Mirror felt the backlash from big votes against pay awards for top executives.
67 per cent of Pendragon shareholders who voted, voted against the remuneration report. Pendragon said that it would not proceed with the pay deals in the remuneration report and would consult with shareholders on how to proceed.
Pendragon chief executive Mike Davies said: "I would like, on behalf of the board, to take this opportunity to reassure all shareholders that we have taken their objections about short-term and long-term incentive plans seriously."
At Trinity Mirror 45.9 per cent voted against the pay deal. Chief executive, Sly Bailey, has already announced she will be stepping down later this year.
Aviva, AstraZeneca and Inmarsat all saw large numbers of shareholders vote against the remuneration plans put in place by each of these companies as shareholders attempted to send a message to boardrooms throughout the UK.
This week’s events follow other big votes against the pay to top executives, Barclays, UBS and Citigroup in recent weeks.26.9 per cent of investors rejected the pay deal offered to Barclays chief executive, Bob Diamond of £17.7 million.
Aviva became just the fourth FTSE 100 company ever to have its remuneration report thrown out as the decision by its chief executive Andrew Moss to waive his £46,000 pay rise was not enough to divert shareholders from wider concerns over the performance of the company.
The Aviva revolt is particularly significant because Aviva itself is a big institutional shareholder and it is the first time the city has voted in such large numbers against one of its own and could mark a shift in the environment surrounding similar votes in the future.
However, the vote at Aviva is non-binding which means Aviva’s top executives can keep their pay deals for 2011. However, it could make a future review more likely.
In the Queen's Speech yesterday setting out the government's legislative programme for the next 12 months, future shareholder votes against pay deals may become binding if, as expected, recommendations from the Independent Commission on Banking are implemented.
And yesterday, Sly Bailey chief executive at media group Trinity Mirror for the past ten years resigned her position against a background of falling share prices, redundancies across the group and an expected shareholder revolt over her £1.7m pay package.
City analysts have dubbed the wave of shareholder discord as the city’s “spring of discontent” as angry shareholders finally say enough is enough when it comes to rewarding failure.
Last week, David Brennan left his post as chief executive of AstraZeneca following pressure from shareholders.
The trend continued at Inmarsat, a satellite company, where almost 40 per cent of shareholders voted against the remuneration plan that would have led current chairman, Andrew Sukawaty receiving the same pay he got when he combined his current role with that of chief executive.
At Premier Foods, 26 per cent of shareholders voted against executive pay deals after its new chief executive received £2 million as a “golden hello”.
It may be that the response of Pendragon to engage actively with shareholder dissent will become a more common response from other companies on the end of similar votes.
Corporate governance consultancy Pensions Investment Research Consultants (Pirc) welcomed the response of Pendragon to the vote, saying: "We welcome the company's commitment to go back to the drawing board over its remuneration policy."
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