Red top warnings led to 30% of shareholders to vote no

The Association of British Insurers’ (ABI) Institutional Voting Information Service (IVIS) says its red top warnings led to an average of 30% of shares voting against management last year compared with 13% in 2008.

IVIS gives colour coded warnings, with red indicating a matter of serious concern. IVIS subscribers hold 30% of the FTSE All-Share. Of all reports published in 2009 12% were red, 20% were amber and 68% were blue, indicating no areas of major concern.

The IVIS annual review also found that executive pay inflation slowed last year with base salaries for FTSE 100 chief executives rising by 5.3%. Average bonus payouts were also down to around 90% of base pay compared with more than 110% in 2008.

Pay restraint

Peter Montagnon, the ABI’s director of investment affairs, said: “Welcome signs of restraint continue with 51% of FTSE 100 companies having now frozen base pay for their chief executives, but it is also clear that shareholders are ready to signal their impatience with companies whose remuneration approach does not take account of the impact of the economic downturn.

“This mood appears likely to continue in 2010. Given the strong public focus on remuneration, it is more important than ever that companies develop policies which are properly focused on linked pay to performance in delivery of agreed strategy.”

Five company reports on remuneration were voted down by investors in 2009. They were Bellway, Provident Financial and Punch Taverns , which were red-topped by the ABI, and Royal Dutch Shell and RBS, which were amber-topped.

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