2012’s “Shareholder Spring” was something of an illusion, according to KPMG’s latest guide to directors’ remuneration, which reveals that there has been less shareholder opposition on pay this year than last.
According to the accountancy firm, only 10 companies in the FTSE-100 experienced significant levels of shareholder dissent on remuneration report votes in 2012, compared with 34 in 2011.
Commenting on the findings, the firm’s head of reward, David Ellis, says: “The actual story of the ‘Shareholder Spring’ is not one of a mass demonstration of shareholder discontent.
“Instead, it is best described as the public demonstration of shareholder disapproval towards a limited number of companies relating to specific circumstances and issues.”
However, looking ahead, Mr Ellis predicts further and more meaningful shareholder opposition to executive pay proposals in 2013, as a growing number of long-term incentive plans come up for renewal.
In KPMG’s view, in order to receive a clean bill of health at an Annual General Meeting, remuneration committees will need to have:
Understood investor views and expectations.
Created a clear link to strategy by clearly aligning the components of pay with the company’s aims and key performance indicators.
Demonstrated the link between pay and performance, so that success is rewarded and there is no potential for payment for failure.
Complied with the new regulatory requirements and used the changes as an opportunity to enhance the communication with shareholders and improve the relationship.