A governance expert has warned that the current AGM season could still see shareholder dissent over chief executive pay despite City figures declaring attitudes have changed towards bumper remuneration deals.

Bernadette Young, director of Indigo Independent Governance, warns boards that higher pay levels will require a convincing explanation if they are to avoid 2025’s big increase in shareholder revolts.

“Yes there is greater acceptance that UK companies must remain competitive on pay and able to attract the best talent, including from the US,” writes Young in the Financial Times. “But London-listed boards will need to clearly justify any decisions to supersize executive pay with a coherent rationale to avoid a repeat of last year when shareholder revolts (20% or more) against pay deal among FTSE 100 companies doubled.”

London Stock Exchange chief executive Julia Hoggett launched a campaign for higher pay in 2023 in combination with the Capital Markets Industry Taskforce (CMIT), a City lobby group which she co-headed.

Many companies have responded with increased rewards for chief executives, including for David Schwimmer, London Stock Exchange Group (LSEG) CEO.

This season attention has focused on companies like energy giant Shell which proposed near 60% increase in total pay for CEO Wael Sawan to be voted on at the 19 May AGM.

According to the Investment Association’s Public Register, 24 companies saw shareholder revolts over remuneration reports last year, including LSEG, 30% against, Unilever, 27.7%, and Melrose Industries at 65.6%. There was also 12 revolts against remuneration policies.

City figures have made much of the pay disparity between the UK and the US where CEOs receive much larger sums.
Reporting on the issue last month the Financial Times quoted one anonymous chair saying: “The City has to choose: if it boldly rejects the US approach to high pay as an outlier in the world, then it must also reject having US chief executives or executives who live in the US.”

The High Pay Centre, a think tank, calculated in January that the average FTSE 100 CEO earned as much as the UK’s median salary by midday on 6 January.

The centre also calculated that 2024-2025 saw average CEO pay in the FTSE 100 rise by 6.8% to £4.58m. “This is the highest level of FTSE 100 CEO pay on record, and the fourth successive year that CEO pay has grown. The last three years have all been record breaking,” a report said. The number of companies paying their CEOs more than £10m also increased by 30%.

The UK’s 2026 AGM season only just getting underway. It remains to be seen whether investors will challenge pay deals in high numbers or accept the upwards trajectory as a necessary shift in UK corporate governance.