Hermes also outlined its plans to oppose the remuneration policies put forward at the AGMs of Shire, Weir Group and Tullow oil.
In respect of Shire, it said, it did not support the proposed 25% increase to the salary of CEO Flemming Ornskov as “his overall bonus potential is more than 10 times his basic salary and his total remuneration was over $21m last year.”
It also urged shareholders to vote against the proposed remuneration policy at Weir Group’s AGM due to the proposed award of restricted shares which are not tied to performance targets.
“To focus on creating value over the long term, we believe that the company should have performance targets and apply the test of common sense if these prove to be unrealistic due to unanticipated market conditions.”
Asked his view of the current shareholder dissatisfaction with UK Plc remuneration policies at a Q&A session in London on Wednesday evening, Jupiter Income Trust manager, Ben Whitmore said that the firm demands that firms use common sense when remunerating executives.
By way of example, Whitmore cited BP’s proposal to increase CEO pay, despite reporting its biggest ever loss, because it was measuring its CEO on other areas of performance such as safety.
“While he did indeed perform very well in this area, we want the remuneration committee to exercise more common sense and so we voted against the proposal.”
Not all companies were singled out for poor policies, however.
RLAM highlighted Aviva’s remuneration policy as an example of what companies should be doing.
Hamilton Claxton explained: “We are pleased to see that Aviva has reduced its LTIP grant, following discussions with shareholders and proxy agencies. As such, we will be voting for their remuneration report. This is a clear example of a board being sympathetic to both the views of investors and the public mood.”
