By Jessica Hodgson
Two major shareholder bodies Wednesday threw their weight behind a U.K. government proposal to give investors binding votes on corporate pay policies, amid mounting anger about executive pay, principally focused on the financial services sector.
The Association of British Insurers, whose members control roughly 12% of the U.K. stock market, has supported the plans in a submission, a spokeswoman said. Pensions Investment Research Consultant, or PIRC, said in a statement that it supported the measure, proposed by business secretary Vince Cable. The ABI and PIRC were responding to a consultation launched by Cable's department in March.
Tha ABI's head of corporate governance, Andrew Ninian, said in a statement that the ABI "welcomed the opportunity to continue to improve the regime to tackle reward for failure and we will continue to work closely with the government on this."
PIRC's managing director, Alex MacDougall, said: "At present, only a small minority of companies run the risk of serious challenge from shareholders over remuneration, and investors' powers are relatively limited."
"If we want a market-based system of oversight of executive remuneration then shareholders must have the right tools to do the job."
PIRC also said in a statement it potentially supports a plan to increase to 75% the threshold of support required from shareholder votes on pay policy. A person familiar with the ABI said it prefers to use a simple majority, as opposed to 75%.
The submissions from the shareholder bodies come after several U.K.-based companies in the financial services sector have faced rebellion from shareholders on pay. Aviva PLC (AV.LN) one of the U.K.'s biggest insurers, Monday said it would review its remuneration policy in response to shareholder anger about executive pay, and that its CEO, Andrew Moss, had turned down a proposed 2012 pay increase.
Meanwhile, senior management at Barclays PLC (BCS) were asked Friday by investors to boost dividends and spend less on executive pay packages, as nearly 27% of voting shareholders refused to back the bank's 2011 pay report.
At an annual general meeting, private shareholders heckled Barclays Chairman Marcus Agius and CEO Bob Diamond as the two men defended the bank's 2011 pay policies while acknowledging more work still needs to be done to balance shareholder and employee rewards.
- By Jessica Hodgson; Dow Jones Newswires; +44207 8429373; email@example.com.