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 patterns 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 continuing unrest about the rewards shelled out to executives. Three of the five remuneration reports with the heaviest support were from banks. 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.
Barclays' chief executive, Bob Diamond, was paid £6.75m in salary and bonus last year but is in line for many 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 investment banking, and Eric Daniels, who earned £2.6m in his last full year at Lloyds.
Brendan Barber, the TUC general secretary, said: "Too many fund managers are still failing to use the power of their investments to influence corporate behaviour. The fact that UK bank remuneration reports received so much backing in the face of diminishing dividends and poor stock market performance is a clear sign that institutional investors are not doing their job properly."
For most bank bosses the bumper payouts came in years when their shares continued to languish and shareholders, including small investors who rely on income from their holdings, got little if any dividends.
Mr Barber called on the Government to force through change, particularly on executive pay. Vince Cable, the Business Secretary, turned up the heat on shareholders on Sunday by calling on them to be "active and socially responsible" over pay. He said the Government was ready to legislate to tame excessive pay unless fund managers took responsibility.Reuse content