Shareholder revolts over remuneration reports have declined among FTSE 350 companies, an indication that investors could be getting behind the claim that UK executives need more pay.

The news comes in statistics compiled for Board Agenda by Georgeson, the shareholder consultants, covering AGMs over the first half of the year. The figures show that remuneration revolts—opposition of 20% or more and notifiable to the UK’s Public Register—have fallen to single figures for the first time since 2022.

Daniele Vitale, head of ESG in the UK and Europe for Georgeson, says: “As of May 31st 2024, FTSE 350 companies saw a surge of investor support for remuneration reports this AGM season as the number of resolutions with more than 20% opposition drops to single digits for the first time in three years.

‘Retention of talent’

“This increase in support for remuneration could be attributed to market perceptions that more work is needed to help ensure the retention of talent amongst senior executives in the UK.”

Georgeson’s figures show that, from January to May this year, there were 195 remuneration report resolutions but only five votes of more than 20% in opposition. That amounts to 2.56%, compared with 10% for the same period last year and 9.23% in 2022.

The news comes just over two weeks after London Stock Exchange chief executive, Julia Hoggett, delivered a speech in which she said remuneration committee chairs were willing to risk the ire of shareholders with upgraded pay deals for their chief executives.

She said there had been a “far greater willingness” of remuneration committee chairs to “sit on what I call the naughty step”.

She added that investors were shifting their stance to support enhanced pay levels, saying the LSE had seen a “change in mindset from some very significant asset managers” to the extent that some big pay deals had avoided shareholder revolts.

It was Hoggett who last year prepared the ground for the current spate of pay rises with a blog arguing that the UK “should be encouraging and supporting UK companies to compete for talent on a global basis, so we remain an attractive place for companies to base themselves, stay and grow.”

Not everyone has supported higher pay. Senior City figure Paul Drechsler has warned boards not use US pay levels as a benchmark, while academics have criticised demands for more pay as “magical thinking” and confusing “cause and effect”.

Going downhill

Demands for higher pay comes as London Stock Exchange struggles with a falling number of listed companies.

In a recent article for The Conversation, UCL finance professor Rama Kanungo wrote: “London Stock Exchange, which can trace its heritage to the coffee houses of the 17th century, is failing.

“The volume of shares traded is sharply declining and some UK companies are swiftly moving to the US market.”

John Colley, professor of finance at Warwick Business School, has written that the LSE is besieged by problems: investors are putting their money into other markets as companies choose alternative jurisdictions for their IPOs; private equity has taken over where companies would once have chosen a flotation; LSE Group management may be distracted by the 2021 acquisition of Refinitiv, a data provider, for £20bn; and tech companies disliked London because it did not allow dual class shares (that has since changed).

London is set for a major overhaul. The Financial Conduct Authority is due to meet later this month (June 27) to green light the final version of new rules aimed at boosting the capital’s stock market.

Changes will likely see the creation of a single listing category and a loosening of the rules for dual class shares. There is also a “disclosure-based” approach under consideration, which many view as less prescriptive rule making that is less onerous for companies considering a flotation.

The LSE has troubles and views improved CEO pay as part of the solution. On the Georgeson figures, investors appear to be buying the argument.