Investors most likely to vote together on pay issues

Alignment of corporate objectives with executive incentives has become a key AGM issue

Investors are most likely to work with their peers on issues of executive pay in the lead up to company annual general meetings, a survey has found.

The 2019 Institutional Investor Survey by consulting group Morrow Sodali, found that 67% of investors now engage with other shareholders on remuneration issues ahead of company AGMs and consider the theme to be among the ‘most important’.

“This survey provides issuers with valuable insights on investor expectations and voting policies,” said Morrow Sodali’s Kiran Vasantham, director of investor engagement. “It is a bellwether for all companies as we enter the 2019 annual shareholder meeting season.”

Engagement on executive remuneration is now considered the most significant issue among investors, according to the survey, which polled 46 global investors, responsible for some $33 trillion in assets around the world.

The findings echo a trend that has been playing out in the news cycle in recent months, with major fund groups such as Schroders, Royal London Asset Management and Hermes Investment Management demanding that companies align executive pay incentives with corporate goals.

In November, RLAM singled out housebuilder Persimmon for a “poorly thought out remuneration decision” while Schroders voted against remuneration policies at video streaming group Netflix last year.

Released on Tuesday (16 April), the survey also found that 45% of investors believe engagement with their peers on matters of board composition was also ‘most important’, while 26% felt the same way on climate change issues.

Issues relating to corporate lobbying and political expenditure were deemed to be the least important, in terms of cross-investor engagement in the lead up to annual meetings.