Investor rebellions see leading UK companies rein back board largesse

● But the gravy train continues at FTSE250 businesses, new data shows

Britain’s biggest publicly listed firms have started to rein in surging executive pay after being hit by a spate of shareholder rebellions.

However, the Investment Association (IA), the trade body that represents Britain’s investment managers, said pay plans at the next size of company down, the FTSE 250 constituents, has again soared this year.

New data from the Investment Association shows FTSE 100 companies have “listened and acted” to shareholder concerns, issuing more conservative policies for their executive teams in 2017.

The move has resulted in a one-third fall in the number of remuneration proposals triggering revolts of more than 20 per cent of shareholder votes cast on remuneration resolutions, the association said.

Chris Cummings, chief executive of the Investment Association, said: “Data from the 2017 AGM season shows that investors are flexing their muscles and holding big business to account.

“Executive pay amongst the UK’S largest companies is starting to decline to a level more in line with shareholder expectations.”

Data released by the High Pay Centre think tank and the Chartered Institute of Personnel and Development (CIPD) earlier this year found that the pay packages for FTSE 100 chiefs was already falling last year, down to an average of £4.5 million from £5.4m in 2015. Shareholder revolts swept FTSE 100 firms in 2016, when the bosses of mining giant Anglo American, advertising behemoth WPP and oil major BP all faced investor backlashes.

Nearly 60 per cent of BP shareholders voted against a 20 per cent hike in Bob Dudley’s pay at the oil giant’s 2016 AGM after the group posted its largest annual loss for 20 years.

BP subsequently slashed Mr Dudley’s pay package by 40 per cent and his maximum earnings by $3.7m (£3 million) over the next three years.

Likewise, Imperial Brands – the company behind Davidoff and Lambert and Butler cigarettes -–also moved to stub out a potential shareholder rebellion by withdrawing plans for a bumper pay rise to be received chief executive Alison Cooper.

“There is still some way to go, but a strong signal has been sent to boardrooms around the country,” Cummings added.

However, the IA found that there has been a doubling in 2017 of FTSE 250 companies seeing shareholder rebellions of 20 per cent or more of votes cast against remuneration resolutions.