TUC rebukes institutions for failing to rebel on pay

The TUC has sharply criticised institutional investors in the wake of this year’s passive AGM season compared to the repeated rebellions over pay seen in the 2012 “shareholder spring”.

As the organisation releases its annual fund manager survey, general secretary Frances O’Grady said 2013 had “failed to live up to expectations” with few big investor rebellions compared to a string of rebellions the previous year.

Voting adviser Pirc has made similar criticisms, and the National Association of Pension Fund recently released tougher voting guidelines of issues such as pay and director contracts.

The 11th annual survey – published the day before the TUC’s pension trustee conference takes place at Congress House – found that while in 2011 three respondents supported more than 80 per cent of remuneration reports, only one did so last year.

The TUC also found a marked difference of approach from UK investors when compared to their international peers.

It cites Barclays’ 2012 remuneration report and the election of the remuneration committee chairman, which were opposed by a majority of survey respondents – representing most of the UK’s major institutional investors.

Despite this, the bank easily won both votes, largely due to the support of overseas investors. Subsequently, the Libor scandal resulted in the departure of chief executive Bob Diamond. The chairman Marcus Agius also stepped down.

The 2013 survey has the same response rate as last year. In total, 28 organisations took part – 58 per cent of the number of investors approached. Some 20 did not respond.

Ms O’Grady said: “For corporate Britain to be more accountable, more needs to be known about the way investors vote. Shareholders need to be prepared to challenge proposals from the boardroom more frequently.

“Shareholders who fail to make use of their voting and engagement rights fuel the argument for other stakeholders to play a role in corporate governance. If worker representatives were allowed to sit on boards, they could improve decision making provide an effective challenge to management.”