September 7, 2010
United Kingdom: How Say-on-Pay Fared This Year
– Broc Romanek, CompensationStandards.com
I swear I blogged about this Railpen Investments Research report last year but can’t find the entry – so you should check out what Jim McRitchie recently blogged about it to get an insight into the UK experience with say-on-pay. And below is something that Subodh Mishra of ISS’ Governance Institute wrote a few months back:
Shareholders of SIG voted against the specialist construction supplier’s remuneration report at a May 13 annual meeting, citing concerns over pay increases along with a decline in share price. The tally is the second majority vote against a U.K. remuneration report this year, according to ISS records, and contrasts with 2009 when six companies saw the defeat of such advisory votes.
Investor opposition likely stemmed from a 14.6 percent increase in CEO Chris Davies’s base salary following a year when revenues and share price significantly declined and the company decided not to pay a dividend to its shareholders. Acknowledging the concerns underlying the vote, Chairman Les Tench said the board would give sufficient weight to the opposition voiced by investors and consult with them to address concerns.
“I am extremely concerned about this result and take it very seriously,” Tench said in a statement released after the meeting, adding that he understood the vote related to the increase in Davies’s salary though he did not believe it was excessive. However, Tench noted, “I recognize the strength of shareholder opinion on this issue and intend to consult further with our shareholders to understand their concerns fully.”
Meanwhile, shareholders in industrial materials firm Cookson voted narrowly to approve the remuneration report, with just 50.98 percent investor support, according to the Reuters news service.
Investors in Australia this week similarly lodged the market’s second majority vote against an advisory remuneration report resolution when shareholders of Boart Longyear opposed the drilling products manufacturer’s pay policies and practices at a May 11 meeting. Most of Australia’s annual meetings are held in October and November, meaning that votes against remuneration reports later this year may trump the five evidenced in 2009.