Remuneration proposals put forward by some of the largest corporates in the UK continued to be met with ire from the investment community during 2016 and BMO was no exception.
The asset manager voted against 17% of pay-related resolutions in the UK meetings it attended, up marginally from its 16% track record in 2015.
The greatest areas of concern for shareholders were excessive payouts that were inconsistent with achieved performance, weak performance targets and excessive focus on short-term outcomes.
While this might not seem like a major change in levels of discontent, BMO said it “marks a continuing trend” and reveals that pay resolutions remain one of the top contentious issues dividing investors and management.
BMO Global Asset Management EMEA voted on over 93,000 resolutions last year, with topics spanning board elections, remuneration and capital structure, at around 9,000 company meetings in 73 countries across the globe.
Of the 8,875 remuneration resolutions the investment manager voted on in 2016, it cast its ballot against the management 52.11% of the time, an 8% increase from its voting behaviour in 2015.
Crucially, BMO stood in opposition to the management on remuneration than more than any other type of proposal.
Vicki Bakhshi, head of governance and sustainable investment at BMO Global Asset Management EMEA explained: “Throughout 2016, we used voting to send a clear message to the board and management of companies where we see a misalignment between pay and long-term performance.”
“Whilst we focus on remuneration arrangements of companies globally, 2017 will be a particularly significant year in the UK for the approval of binding remuneration policies at companies.”
In anticipation of the 2017 crop of AGMs, BMO revealed that it has consulted with half of the top 30 companies in the UK market to discuss constructive changes to their remuneration proposals.
A number of large companies that experienced high levels of dissent were “reluctant to recognise shareholder concerns,” and engage with the group, BMO said.
