British oil explorer Cairn Energy and the country’s No 1 insurer Prudential on Thursday faced investor revolts over executive pay plans.
Cairn Energy said investors holding two thirds of its stock voted against executive pay awards in one of the biggest rebellions to take place yet in the “shareholder spring” of salary disapproval.
Prudential said investors holding 30.33 per cent of its shares voted against its executive pay plans. The dissenting vote, well ahead of the 6 per cent average for British firms last year, came from small investors with concerns about specific aspects of Prudential’s pay practices rather than deep-seated discontent with management, the insurer said.
“Those who voted against have stressed to us that they did so because of concerns about specific issues,” Pru’s outgoing chairman Harvey McGrath said on Thursday at the company’s annual general meeting in London. “They went on to express their full confidence in, and support for, the management of the group and our strategy.”
The 67 per cent vote against Cairn’s remuneration report at its annual meeting on Thursday is the second time in six months that shareholders have expressed their aversion to the company’s pay plans.
Following pressure from investors, Cairn dropped plans to award chairman and founder Bill Gammell share options worth 2.5 million pounds in January. Shareholders owning 27 million shares refused to vote for Cairn’s remuneration report, withholding their votes, while investors owning 11 per cent of shares opposed former Scotland rugby international Bill Gammell’s re-election as chairman.
Thursday’s ‘no’ vote, however, will have no immediate consequences as the votes on remuneration reports are non-binding. But vote on remuneration would become binding under government proposals published this year.
“We have listened to shareholders’ concerns, having had extensive dialogue with investors in recent weeks,” said Jackie Sheppard, Cairn’s new chairman of its remuneration committee in a statement. “Cairn has learned from the recent consultation and is committed to listening closely to shareholders views on governance.”
A growing number of investors in British companies are registering their disapproval at rates of executive pay. The shareholder revolts follow public anger at big pay rises for executives at a time when many Britons are feeling the pinch as a result of high inflation and weak wage growth.
The vote against Cairn’s executive salaries is one of the biggest to date, topping the nearly 50 per cent votes against remuneration reports at newspaper group Trinity Mirror and bookmaker William Hill. Andrew Moss, boss of rival insurer Aviva, and Sly Bailey, head of Trinity Mirror, quit this month amid mounting investor resistance to executive pay rises at underperforming firms.
Other companies including Barclays and Inmarsat have suffered sizeable shareholder revolts over remuneration in a phenomenon dubbed the “shareholder spring”.
Shareholder advisory service ISS, which guides investors on executive pay and corporate governance issues, had objected to above-inflation salary rises for some Prudential directors, a spokesman for the insurer said. ISS could not immediately be reached for comment.
Prudential’s best-paid director last year was Michael McLintock, the head of its M&G fund management arm, who received a 6-million pound ($9.55 million) payout under a management incentive scheme that took his total package to 7.6 million pounds.
That was some 60 per cent higher than Chief Executive Tidjane Thiam, who pocketed a total of 4.7 million pounds.