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Of that 87%, almost two-thirds (63%) believe executive pay is generally too high, while 37% say it’s too high in cases of poor performance. Pension funds also have serious concerns about the pay gap between executives and their workforce with 85% of respondents highlighting it as a problem.
The PLSA member survey also highlights concerns from pension funds over the capacity of asset managers to fulfil their stewardship responsibilities with 35% of respondents stating dissatisfaction. There is also a strong sense that high levels of pay in the asset management industry is preventing asset managers from properly holding companies to account over pay practices, 60% stating it as a problem.
The report’s analysis of remuneration-related shareholder votes at company AGMs found that overall levels of dissent did not change dramatically in 2016. However, the number of FTSE 100 companies experiencing dissent levels of 40% or higher increased from two in 2015 to seven in 2016. In the FTSE 350, nine companies that experienced significant shareholder dissent levels of over 20% in 2015, also received dissent of over 15% in 2016.
The report also argues that of the five FTSE 100 companies with the highest level of shareholder dissent: BP (61%), Smith & Nephew (57%), Shire (51%), Babcock (48%), and Anglo-American (48%), none were prepared to acknowledge they had their approach to remuneration wrong in their subsequent statements to the vote.
Despite this, the PLSA also found that there were no significant votes against the re-election of the remuneration committee chairs who had set the most controversial pay packages.
Luke Hildyard, Policy Lead for Stewardship and Corporate Governance, Pensions and Lifetime Savings Association: “There has been a lot of public debate about executive pay recently and our members have clearly expressed their concern. It’s time companies got the message and started to reduce the size of the pay packages awarded to their top executives.
The PLSA will update its Corporate Governance Policy and Voting Guidelines to reflect the findings in the report. The guidelines will include stronger recommendations on the re-election of remuneration committee chairs, in order to bridge the gap between stakeholder concerns on executive pay and those responsible for overseeing them.