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Investment lobby group urges listed companies to “start listening” to shareholder concerns

PUBLISHED: 08:50 19 December 2017 | UPDATED: 08:50 19 December 2017

Sports Direct is among companies which has experienced a revolt by shareholders in 2017. Picture: Rui Vieira/PA Wire

Sports Direct is among companies which has experienced a revolt by shareholders in 2017. Picture: Rui Vieira/PA Wire

Listed companies are being urged to start heeding shareholder concerns on issues like excessive pay after more than a fifth suffered revolts by investors this year.

The Investment Association has launched a “public register” of UK-listed companies, detailing those which either withdrew a resolution ahead of a vote or saw at least 20% of shareholders oppose a motion in 2017.

The initiative by the asset management lobby group, whose members control £6.9tr of assets, has resulted in 22% of the 640 FTSE All-Share companies being listed on the register including Sky Group and Sports Direct.

Board members’ excessive pay accounted for 38% of the resolutions that were withdrawn or faced notable opposition, while the re-election of company directors was the second most frequent reason for revolts, accounting for 32%.

Investment Association chief executive Chris Cummings said the “significant” number of companies named in the register showed firms needed to “seriously start listening to shareholder views and acting on them”.

“The data gathered for the public register reveals the true scale of investor concern and shows shareholders flexing their muscles by exercising their votes,” he said.

While 31% of companies on the register have already issued a public statement explaining how they are addressing shareholder concerns, Mr Cummings said the association’s members are waiting to see how others respond as they start to “shape their voting decisions for the 2018 AGM season”.

Firms like Pearson have already been given a bloody nose after more than 60% of votes were cast against a 20% pay bump for the loss-making publisher’s chief executive John Fallon, while luxury retailer Burberry saw nearly a third of shareholders vote against generous payouts that include a £5.4m share award for former boss Christopher Bailey.

Earlier this month Sky suffered a twin-pronged shareholder revolt over pay and the re-election of chairman James Murdoch at the company’s annual meeting, amid concerns over his role as chief executive of 21st Century Fox, which is attempting to seize control of the 61% of Sky it does not already own in an £11.7bn deal.

Shareholders also took aim at advertising giant WPP over a £48m pay package for chief executive Sir Martin Sorrell, with more than 21% of votes cast in opposition, or abstention, on the company’s remuneration report in June.

Just last week, Sports Direct shareholders voted overwhelmingly to oppose Mike Ashley’s attempt to hand his brother and former IT director an £11m back payment, though it avoided a full-blown revolt by independent investors back in September over the re-election of under-fire chairman Keith Hellawell.

Business Secretary Greg Clark said there was a risk of tarnishing Britain’s business reputation.

He said: “Most companies are proactive and thoughtful in implementing responsible business practices but there are a minority of firms that threaten the world-leading reputation of our business community.”

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