Shareholder revolts ‘up by a quarter’ at FTSE firms

WPP shareholders challenged the firm's board in June, amid anger over the way it handled the departure of founder Sir Martin Sorrell

Shareholders are getting increasingly fed up with the behaviour of company directors and voting against their decisions, new research has suggested.

Significant shareholder revolts at FTSE firms jumped by 25% in the year to 31 July, the Investment Association found.

The trade group said investors had "shown their teeth" on issues like pay, performance and boardroom diversity.

Business minister Kelly Tolhurst said the government was trying to make firms more "transparent and accountable".

The trade group analysed votes at annual general meetings (AGM) in the period, and found 237 occasions when firms faced "significant shareholder dissent".

• Royal Mail hit by investor revolt over pay

• WPP investors revolt over Sorrell scandal

That counts as opposition of more than 20% - although in some cases the dissent was much higher.

Votes against the re-election of directors was a "key theme", it found, with the number of revolts more than doubling to 80 from the same period in 2017.

Opposition to executive pay packages fell overall, but rose sharply in the FTSE 100 index of Britain's biggest companies.

The Investment Association recorded 18 individual votes against pay at firms such as advertising giant WPP, Royal Mail and pharmaceutical major Astra Zeneca - double the number last year.

'Spread too thin'

Chris Cummings, chief executive of the Investment Association, said: "Shareholders are using their votes to hold individual directors to account for decisions they made on issues such as executive pay and board diversity.

"[They also have concerns when] individual directors do not have the bandwidth to fulfil their roles as they spread themselves too thinly on too many boards."

Under new government rules, any firm that loses a shareholder vote will have to issue a statement after their AGM, then another six months later, setting out how they addressed the concerns.

Ms Tolhurst said: "[This] is one of a package of reforms by the government to upgrade our corporate governance, including board diversity and CEO pay ratio reporting, to make our largest companies more transparent and accountable to their staff and shareholders."