Directors’ pay is too high in many cases and needs to be reduced. High pay is looking increasingly like it is politically unacceptable and this may lead to a backlash of business regulation that will be detrimental to investors.
This campaign is aimed at improving the quality of remuneration arrangements of the companies listed on the Main London stock market, and the AIM market managed by the London Stock Exchange, so that:
i. investors are less likely to lose money as a result of investing in companies that pay their executives too much or for the wrong things.
ii. investors are more likely to receive better returns as a result of better alignment of executives’rewards with those of long term shareholders and incentives that focus on long term performance.
UPDATE 13 June 2018
Remuneration continues to be a key issue for investors and the ShareSoc Remuneration Guidelines, published in June 2106, are proving to be helpful. We now need to ensure they receive a wider audience. We are planning a campaign to send them out to companies, Chairmen, CEOs, FDs and NEDs, NOMADs, corporate brokers, financial advisers and fund managers.
We encourage members to send copies of our guidelines to companies where they are unhappy with the current remuneration arrangements.
We have now split the guidelines into separate documents which focus on only smaller companies (<£200m market cap) and larger companies. Click below to download the guidelines:
Why And How Directors’ Pay Should Be Improved
Directors’ pay is too high in many cases and needs to be reduced. High pay is looking increasingly like it is politically unacceptable and this may lead to a backlash of business regulation that will be detrimental to investors. ShareSoc Directors Cliff Weight and David Stredder discussed Remuneration in this video, which gives useful background on the issues and is still topical today http://www.piworld.co.uk/2016/05/03/mello-april-2016-remuneration-qa/
This campaign was launched with the publication of ShareSoc’s Remuneration Guidelines and a Press Release in May 2016, which received wide media coverage.
To see the ShareSoc Remuneration Guidelines go to Remuneration-Guidelines. Key opinion formers have given their support to the ShareSoc Remuneration Guidelines.
We have set up a Forum for ShareSoc Full Members where you can add comments on remuneration issues: https://www.sharesoc.org/forums/forum/remuneration-forum/ . There are comments on many companies in the Forum which also contains copies of Manifest’s Corporate Governance reports on a number of large companies with contentious arrangements.
We have also issued a series of press releases on companies where pay is excessive. These have been widely reported in the press. In 2016, we have issued 7 press releases so far (Anglo American, Berkeley Holdings, BP, Persimmon, Reckitt Benckiser, RELX and WPP). You can view our press releases here. Use the search box above to search for comment on specific companies.
These are some of the companies we have covered in this campaign during 2016:
Anglo American: Company has shrunk by 80/90% but no reduction in remuneration. LTIP award is same % of salary and offers windfall opportunity – it should have been reduced in size.
Berkeley Holdings: Unnecessary and excessive pay. Excessive dilution. Awards granted at low point in business cycle.
BP: High pay (£14m), the combination of high pay and 20% increase when making £5.5Bn loss, high pension, bonus is pensionable, balanced scorecard targets are too easy and don’t reflect the shareholder experience.
Persimmon: Unnecessary and excessive pay. Excessive dilution. Awards granted at low point in business cycle.
Reckitt Benckiser: High pay (£23m), soft targets, huge LTIP and option awards even though no need for additional incentives.
RELX: Pay of the CEO (£11 million in 2015 and £50 million since he became CEO) too high, excessively complex (5 incentive schemes and 1/30th defined benefit pension scheme), and incentive targets are too easy.
WPP: Unnecessarily high pay (£70 million this year).
We plan to continue with similar numbers of press releases in future.
Attendance at and asking questions about remuneration at AGMs
One of the best ways to hold Boards of Directors to account is to attend their AGM and ask questions. We have increased our visibility at AGMs this year in this respect. And we have fired a warning shot to Companies and their Remuneration Committees that we will question excessive and unnecessary remuneration. We plan to continue to do this in 2018 and urge all ShareSoc members to participate in this campaign.
In 2018, so far, we have attended and asked questions at the AGMs of:
- RTC Group
- Reckitt Benckiser
To Support the Campaign
Note that many of the things we would like to see so that shareholders had more control over pay are promoted in our Shareholder Rights campaign. Click on this link for more information.
If you wish to make a voluntary contribution to support the costs of running this campaign please go to this page of our web site: Donations. Alternatively we do recommend a paid subscription to ShareSoc which gives you many other benefits.
You can use the Contact form on this web site to request that you be added to our contact list for the Remuneration Campaign, or if you have any questions on the Remuneration Campaign. Likewise if you wish to contact the Campaign Manager, who is currently Cliff Weight, please use that contact form.