Big investors waved through higher pay packages for bankers last year despite diminishing returns and poor performance during the recession, according to research.
An analysis of fund managers' voting at company meetings by the Trades Union Congress shows executive pay was the biggest cause of conflict between shareholders and management. Half of the fund managers that replied to the survey supported less than 50 per cent of the company plans they voted on with many supporting a third or less.
But bank pay plans got high levels of support, despite unhappiness about rewards shelled out to the lenders' bosses. Banks made up three of the five remuneration reports with the heaviest support. Barclays was backed by three quarters of the shareholders that responded – the highest in the survey.
Institutional investors are under pressure to intervene against boardroom excess after rubber stamping controversial pay plans and risky deals in the run-up to the financial crisis. A new Stewardship Code introduced a year ago ordered them to reveal how they voted, keep better records of their contact with companies and join forces to rein in boards.
Barclays' chief executive, Bob Diamond, was paid £6.75m in salary and bonus last year but is in line for millions more if he hits certain targets. His pay was dwarfed by that of his investment banking lieutenants, Jerry del Missier and Rich Ricci, who earned about £14m each in salary and bonuses.
Other bankers who enjoyed big paydays included Stuart Gulliver, HSBC's chief executive, who got $9.5m (£5.9m) for his work as head of the investment banking arm, and Eric Daniels, who earned £2.6m in his last full year at Lloyds Banking Group.
Brendan Barber, TUC general secretary, inset, said institutional investors were not doing their job properly. "Too many fund managers are still failing to use the power of their investments to influence corporate behaviour," he said.Reuse content