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Leading article: More shareholder revolts, please


Shareholders are becoming bolder – and a welcome, if belated, development that is, too.

The most damning verdict came from shareholders at the insurance giant Aviva, 54 per cent of whom voted down the company's remuneration policies, including the pay package for the chief executive, Andrew Moss, who was then urged to accompany the departing chairman out of the door. But Aviva shareholders have not been alone in staging revolts against well-rewarded executives this week, during a tempestuous annual meeting season.

Such major companies as Inmarsat, Premier Foods, Carillion and Reckitt Benckiser all suffered shareholder insurrections, albeit smaller ones, on the same day, with Sly Bailey, chief executive of Trinity Mirror media group, resigning rather than face a revolt over her bonus. UBS, Citigroup, Barclays and AstraZeneca are among other big names whose pay policies have fallen foul of a substantial proportion – though not a majority – of shareholders.

What is less satisfactory, of course, is that such votes are advisory rather than binding, so that the companies – Aviva included – can proceed regardless. The harsh truths that are being aired at many of these meetings, however, should give the companies pause before they next approve pay packages that look overgenerous when set against performance. Few would begrudge substantial rewards, when top management has patently excelled, but these are rewards that shareholders – as owners, after all – are entitled to expect a part of. And if performance has fallen short, then the rewards for everyone must be curbed accordingly.

Thus baldly put, that principle sounds obvious – except that during the boom years shareholders lost their bite. So when the lean years came along, it was left to sections of the media and the Occupy campaigners to vent the widespread public fury about "fat cat" pay. One way to address the problem – for it clearly is a problem – would be regulation limiting top pay in relation to profits or other salaries. Far preferable, though, would be for the company owners themselves to judge what is affordable. Shareholders have the power; they should use it.