Investors are making their voices heard against what they see as exorbitant pay deals for executives. New research shows that pay revolts have more than doubled among the FTSE 100 companies that have so far held their AGMS.

Figures reveal that of the 56 companies to have hosted their annual meetings, 11 have so far suffered pay revolts—votes of 20% or more of shareholders—against remuneration reports.

According to Indigo, a corporate governance advisory firm, there were only five revolts at this stage last year.

The rise in revolts comes within weeks of London Stock Exchange chief executive Julia Hoggett lauding efforts in the UK to increase executive pay packets.

Bernadette Young, director of Indigo, says the revolts are “likely reflecting efforts by boards to bring UK director pay more in line with the higher amounts paid in the USA”.

“The overall increase in rebellions,” Young says, “is indicative of the increasingly activist shareholder culture that we have seen developing in the UK in recent years.

“Boards would be well advised to proactively engage with shareholders and advisers before and after any major changes are made to company policies to ensure they have not misread investor sentiment and are not forced into embarrassing climb downs or providing high-profile justifications for their actions.”

Shotgun engagement?

Companies that suffer a shareholder revolt over pay must have it noted on the Public Register and issue a statement outlining their response, which is usually engagement with shareholders.

The biggest revolt so far this year is the 66% vote against the remuneration report of aerospace business Melrose Industries. Clarkson PLC, a shipping services provider, saw votes against of 47%.

Perhaps most ironic was the 30% vote against the pay of London Stock Exchange Group and its CEO David Schwimmer, whose pay rose significantly last year.

It is his direct report, Julia Hoggett, who has consistently championed higher levels of pay during her time as chair of the Capital Markets Industry Taskforce (CMIT), a campaign group.

At CMIT’s annual conference at the end of June, Hoggett boasted of the rise in pay as part of a “roll-call of progress” in the City she described as “remarkable” and “unmatched”.

Other research has indicated that shareholders appear to be increasing their opposition to pay deals. One report from the advisory firm Georgeson suggests there had been a threefold increase in revolts across the FTSE 350.

Daniel Veazey, Georgeson’s corporate governance manager, said companies appeared to be “challenging the status quo” on pay even more this year.

Rising pay levels have prompted one think tank, the High Pay Centre, to call for a “maximum wage” ceiling expressed as a pay ratio.

Executive pay is a perennial concern but latest research indicates that while shareholders may tolerate higher pay, they will not support remuneration that appears disproportionate.