Executive salary update
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As large investors tried to punish companies that they believed had provided too much cash to executives during the pandemic, European companies were hit by shareholder protests against increased pay at this year’s annual meeting.
According to a report by Georgeson, a corporate governance consulting firm, in seven major European markets, including the United Kingdom, Germany, the Netherlands and Spain, shareholder dissent to compensation-related resolutions increased by 18%. Georgeson classifies at least 10% of opposition management proposals as major objections.
Spain’s Ibex 35 Large Companies Index has the highest proportion of disputed compensation resolutions, with 60.6% of compensation report proposals being questioned in 2021, compared with 33.2% last year. Approximately 57.7% of remuneration policy decisions in Spain have encountered “significant objections”, compared with 28.6% in 2020.
Georgeson UK/Europe Corporate Governance Director Daniele Vitale said that during the 2020 annual meeting, due to the difficult and unexpected circumstances facing the company, investors were given a certain amount of leeway in terms of remuneration.
He said that this patience has been exhausted in 2021, and many large asset management companies possible In order to become more severe about concerns, there is a disconnect between how companies handle executive compensation and how they treat shareholders and other stakeholders.
Georgeson’s report last year found that companies in Spain, Italy, the Netherlands, and the United Kingdom are more likely to cut dividends than executive compensation in 2020.
“There is a perception that the company will be very strict on compensation incentives in 2021, but investors are also significantly more strict,” Vitale said.
Edmond de Rothschild Asset Management responsible investment director Jean-Philippe Desmartin (Jean-Philippe Desmartin) said that given the pandemic, especially in industries where stock prices are affected, investors want greater transparency in executive compensation And the connection with performance.
He added: “In some cases, compared with 2020, when the Covid-19 pandemic is not over, investors are shocked by the end of executive compensation control compared with 2020.”
BlackRock, the world’s largest asset management company, is one of the big investors taking action Tough stand In terms of salary this year, penalize companies that adjust previously agreed performance indicators to increase bonuses. In the 12 months to the end of June, the New York-based fund company voted against management in 33% of Europe’s “salary rights” proposals, up from 26% last year.
Georgeson said that companies such as Informa, Deutsche Telekom, Swatch Group and Akzo Nobel have all encountered shareholder dissent on the issue of executive compensation this year.
Georgeson’s 2021 data show that investors have also become more stringent in terms of director elections and stock issuance, and controversial director votes have increased by 36.9%.
Domenic Brancati, chief executive officer of Georgeson’s UK/Europe business, said: “We have seen shareholders use voting against directors to express their dissatisfaction with specific issues such as climate change and other environmental issues.”
A total of 13 board proposals were rejected by CAC 40 companies in France, and 4 were rejected by FTSE 100 in the UK.