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The Missing Link
New research published today sheds light on the myths surrounding the so-called ‘Shareholder Spring' and casts doubt on institutional investors' appetite for tackling high pay.
The report, which comes at the end of an AGM season defined by public outrage at executive pay, reveals that 72% of institutional investors responding to a government consultation on high pay opposed plans to give them a binding vote on executive pay. It claims that the final proposals - of a binding shareholder vote on pay every three years - were a compromise between a government keen to give shareholders more power and ‘institutional investors reluctant to assume these powers.'
The report also uncovers serious failings in the accountability of pension funds and their City fund managers to the savers whose money they invest. It examines pension fund responses to emails from savers sent as part of ShareAction's ‘Your Say on Pay' campaign, which saw 246 different funds asked to vote against excessive remuneration. Of the sample of responses analysed, a third made no reference whatsoever to remuneration and only 20% provided links to information about how votes were cast.
This is compounded by gaps in investors' public disclosures. For example, Threadneedle only disclosed votes at one out of ten companies examined. Only one of the twenty asset managers assessed in the report disclosed reasons for all significant votes, with a further eight giving reasons only for votes against management.
Catherine Howarth, Chief Executive of ShareAction, said:
"This research reveals that the government has handed additional powers to shareholders who are reluctant to use them. On top of this we've found a missing link between pension investors and the savers whose money they look after.
People in the UK who are saving for a pension often have almost no way of accessing information on how their fund has voted on executive pay deals. As our report shows, even when they take the trouble to ask their fund, the responses received are often inadequate and dismissive."
She went on to say:
"If we are serious about tackling spiralling executive pay we must empower savers to hold their pension and ISA funds to account."
How Asset Managers Voted on High Pay