In the last couple of weeks the first few FTSE100 AGMs have been held. Imperial Tobacco, Aberdeen Asset Management and Compass Group all received votes in favour of more than 90% for their implementation reports. As mentioned in our previous blog post, Aberdeen Asset Management is proving to be the exception by sticking with last year’s policy report. This is not as predicted, the legislation does not require the policy to be voted on every year and the GC100 guidance also suggests the policy is expected to last for three years. If the season carries on as it has started, shareholders will be thrilled to be reviewing 66% of the FTSE100’s remuneration policies again!
Compass Group and Imperial Tobacco received votes in favour of 90.7% and 93.6% respectively for their new policy reports. Imperial Tobacco made various changes to their policy in the last year, including requiring that half of any bonus paid is deferred into shares and released after three years and the introduction of a two year holding period for vested LTIP awards. Compass Group has made a similar change and also introduced a two year holding period at the end of the vesting period for LTIP awards. Compass’s policy states this will help facilitate malus and clawback and Imperial Tobacco has also strengthened its clawback provisions. Clawback is certainly the hot topic of the moment! Compass Group has also increased the CEO’s annual bonus and LTIP opportunity, which may explain why the votes in favour were around 7% less than last year.
All three companies published supplementary statements to their policy reports in the 2013/14 AGM season, but the companies have obviously taken note of shareholders views as this was not the case this year. Full voting results, compared to the results of last year’s AGMs can be viewed on our single source document.
In other executive remuneration news, the pay difference between CEOs and employees was highlighted again in a report in the Financial Times last week. The report mainly concentrates on the position in the US, however it also picked up on The High Pay Centre’s call for a UK pay ratio. The Directors’ Remuneration Reporting regulations in the UK currently require the percentage change of the CEO’s salary, bonus and benefits from the previous year to be compared to the percentage change for employees. Showing a pay ratio is a rather large step from the current requirements and without legislation companies are likely to be reluctant to go into any more detail.