Directors personally in line of fire over pay

COMPANY directors are increasingly being held personally accountable for excessive executive pay and other corporate governance failings, according to City investors.

Data from the Investment Association (IA), which represents most of the Square Mile’s biggest institutions, reveals that the rate of protest against individual board members at shareholder meetings has increased more than fivefold this year.

Last year only four directors of Britain’s top 350 companies faced significant rebellions against their appointment or reappointment to the board, defined as a 20pc vote against. This year the figure is 21, including four directors of FTSE 100 giants and 16 of smaller listed companies.

Andrew Ninian of the IA said the leap showed fund managers were more willing to pin the blame for overpaid executives on remuneration committee chairmen. Concerns over non-executive directors spreading themselves too thinly across multiple boards have also triggered protests this year.

Big business figures under attack in this year’s AGM season have included Elizabeth Corley, chairman of Pearson’s remuneration committee, which approved a £343,000 bonus for John Fallon, its chief executive, despite a string of profit warnings. Irene Lee drew protests from HSBC shareholders over the number of boards she sat on, while Kenneth Hydon, chairman of Reckitt Benckiser’s audit committee, faced a rebellion over the firm’s safety failures.

The IA’S data show the FTSE 250 has also emerged as a major front in the battle between shareholders and boards over bosses’ pay. While FTSE 100 giants faced more than a third fewer protests over executive pay in the 2017 AGM season, the figure for smaller firms nearly doubled to 29. The Government is due to propose changes to corporate governance rules next month.