Shareholders gave a further signal yesterday that they are unwilling to tolerate excessive executive pay settlements when housebuilder Crest Nicholson saw investors vote against the company’s pay proposals.
The remuneration report met with opposition from 58% of shareholders who revolted against the pay scheme. The Financial Times reports that shareholders dislike a reduction in the levels at which incentives kick in under a long-term pay plan.
Crest Nicholson’s board is said to be “consulting” with shareholders, though reports add that the company has revealed no intention to adjust the pay scheme in the wake of the vote.
The FT reports shareholder Standard Life Investments saying that it was “disappointed that the company chose to substantially reduce the profit range at which incentives for management were paid, without consulting shareholders.”
This morning Bloomberg writes that many companies are already scaling back their pay deals for chief executives in an effort to head off conflict with shareholders.
The article says: “With a spate of executive pay policies coming up for renewal in coming weeks, some companies are responding to the pressure by cutting bosses’ remuneration. Others are banging on the doors of shareholders from Aberdeen Asset Management Plc to Legal & General Investment Management, asking them to look at pay proposals before they’re put to a vote — even when they’ve had no problems in the past.”
Anglo American has already acted on pay with a cap on bonus payments. Imperial Tobacco withdrew a pay rise earlier in the year for chief executive Alison Cooper following concern from shareholders.
Imperial’s chairman Mark Williamson said in January: “We have been actively engaging with shareholders for some time and while we received considerable support, it is clear that views have changed over that time and that the right course of action now is for the board to withdraw the resolution.
“The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business and we will re-engage with shareholders to reach a consensus on this important issue.”
This week a report from the Equality Trust revealed that 90% of the FTSE 100’s chief executives are paid more than 100 times the national living wage. The trust is campaigning for mandatory pay ratio reporting.