Investors did not challenge banks in 2011

Fund managers failed to tackle high pay awards before 'shareholder spring', new research shows

City fund managers eased pressure on banks over thorny issues such as remuneration last year, despite being only three years away from the financial crisis they helped caused, research has revealed.

Pirc, the corporate governance consultancy which advises some of Britain's biggest pension funds, found that the level of support for bank directors and their pay from fund managers in 2011 was at its highest level for three years.

It drew the conclusion after researching the public voting disclosures made by 12 substantial fund managers. The research does not include this year's votes, which have seen a swathe of annual general meeting polls go against executive pay in what has become known as the "shareholder spring".

Pirc said that five of its sample voted to accept all of the banks' remuneration reports in 2011, compared to two in 2010, one in 2009 and six in 2010.

The organisation said that while the figures "might be surprising" they confirmed "anecdotal feedback that some asset managers were wary of bank bashing last season".

There has been a reversal this year. The rebellion against Barclays' chief executive Bob Diamond grew so strong that the bank offered concessions on his compensation package, as well as that of the finance director Chris Lucas.

It has since emerged that the remuneration committee head, Alison Carnwath, had argued against Mr Diamond's £2.7m bonus, but failed to convince others, including Barclays chairman Marcus Agius. Her warning was prescient, as nearly one-third of the bank's shareholders refused to endorse its remuneration report, which was seen by many as the start of a series of investor rebellions.

Pirc said voting decisions on director elections at the banks followed a similar pattern last year. The number of oppose votes and abstentions – which were less than 0.5 per cent of all votes – was lower in 2011 than in 2010 and 2009.

Pirc also looked at auditor appointments and found that only one fund manager opposed or abstained on any votes on auditor appointments throughout the four years of the study.

The research only covered four years because it is only over that period of time that sufficient fund managers have disclosed their voting records publicly.

The study has been submitted to the Treasury Select Committee, which has been looking at the pay issue. Pirc has taken a hard line over renumeration and has helped encourage rebellions at the likes of insurance giant Aviva and media group Trinity Mirror.

The Association of British Insurers, which represents some of the country's biggest investors, was the other major driving force behind the shareholder spring. Just last week it issued a "red-top" warning over the 30 per cent remuneration rise of WPP boss Sir Martin Sorrell.