Large companies are coming under increasing pressure to tackle excessive boardroom pay, bonuses and gender diversity, with Ocado, AstraZeneca and Metro Bank among the organisations facing shareholder backlash.
In a letter to the UK’s 60 largest asset managers, coordinated by the High Pay Centre, trade union leaders highlighted the importance of pay ratio disclosures and urged investors to hold companies to account over low pay and poor employment pratices.
Janet Williamson, chair of Trade Union Share Owners, said: “Too many companies over-pay the board and under-pay the workforce. Investors should play their part in building back a fairer society after Covid and ensuring that the companies they invest in pay their staff a fair share of the wealth they create.
“The best way to do this is through collective bargaining covering both directly and indirectly employed workers.”
Advisory firm Glass Lewis had urged Ocado investors to reject the online grocery retailer’s pay proposals, according to The Telegraph. It said there was too much focus on “shareholder value creation” at Ocado, rather than the performance of the business and its management.
Chief executive Tim Steiner earned £58m in 2019 and £6.9m last year. If its share price continues to rise, Steiner could receive up to £100m in bonuses over five years, under current proposals.
However, at the annual general meeting yesterday, 87% voted in favour of the remuneration report.
Ocado said: “The company recognises that some shareholders remain concerned about the Company’s approach to executive remuneration. The company has had a number of shareholder consultation exercises regarding the company’s remuneration policies and so the shareholder concerns are well understood by the Remuneration Committee.
“The Remuneration Committee continues to be committed to ensuring that the quantum of remuneration provided to the executive directors is both fair and competitive, and supports the long-term success of the business as well as long-term shareholder value.”
Some 23% of shareholders voted against the reappointment of Andrew Harrison as a director of Ocado because of concerns over the level of gender diversity on the board, as well as concerns over executive remuneration.
“The board recognises the importance of diversity and inclusion in the boardroom and throughout the organisation, and understands that a diverse board will offer wider perspectives that ultimately improve decision-making. Our diversity policy is committed to increasing female and ethnic representation on the board and throughout the wider organisation in the future,” Ocado said in a statement.
Metro Bank has also faced criticism from investors after it handed new chief executive a deferred annual bonus of more than £520,000.
Institutional Shareholder Services has recommended that shareholders vote against Metro Bank’s remuneration proposals, on the grounds that its bonus targets are not stretching enough.
“The structure of the bonus framework, especially under financial conditions, raises concerns, particularly as the weighting structure suggests that performance in one area is able to compensate for the outcomes from another element,” ISS said.
“Similar concerns are noted on certain individual performance targets and achievements, a number of which resemble vague day-to-day activities.”
AstraZeneca is also facing investor revolt over executive pay. Chief executive Pascal Soriot is in line to receive pay and bonuses totalling a maximum of £17.8m in 2021.
According to analysis by the CIPD and the High Pay Centre, the median FTSE 100 CEO received £3.61m in pay in 2020, a year where many frontline workers saw their pay frozen or cut. This figure is roughly 119 times the earnings of the median UK full-time worker (£30,353).
Only a third of FTSE 100 organisations use employee-related metrics when calculating executives’ performance-related pay, the CIPD and High Pay Centre found.
Luke Hildyard, director at the High Pay Centre, said: “To get the economy moving again, and to build a fair society that works for everyone, investors need to make sure that all workers are fairly paid and fairly treated at the companies in which they invest.
“The Deliveroo IPO, when a number of institutional investors spoke out about the company’s exploitative employment practices, provides a welcome example of the investment industry taking these issues more seriously in the aftermath of the pandemic. But that has to be the start of a permanent, ongoing process, rather than a one-off instance.”
Regulations requiring listed companies with 250 or more staff to publish the pay gap between their CEO and low and median earning employees came into force last year.