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August 21, 2019

Fewer shareholder revolts, FTSE 100 CEO pay decreases

The number of FTSE 100 companies receiving low votes (below 80% in favour) on pay fell by around a half – 7% of companies compared to 13% last year, according to Deloitte’s annual FTSE 100 executive remuneration report.

In contrast, the FTSE 250 experienced a more challenging AGM season, with around one-in-six companies (16%) receiving low votes on the annual remuneration report, the highest level of shareholder dissent seen in this market for the last five years. However, in general, levels of investor support remain high with a median shareholder vote of around 96% across the FTSE 350.

The impact of regulatory changes under the new UK Corporate Governance Code are being felt with FTSE 100 companies moving to reduce executive pensions and implement requirements for executives to hold shares post-leaving.

The median package for a FTSE 100 chief executive was around £3.4m in 2018, compared to £4m in the previous year. Deloitte found that almost a third of FTSE 100 CEOs received no increase in base salary, with median salary increases remaining at around 2%. In 2018 bonus pay-outs remained similar to the previous year (median of 70% of maximum compared to 72% the previous year), although the range of pay-outs fell slightly.

Only 5% of FTSE 100 companies now operate more than one long-term incentive plan, compared to almost half of companies five years ago. In 85% of FTSE 100 performance share plans, executives will now receive no shares until at least five years from grant, compared to around half (45%) of plans in 2014. This will increase further in the coming year following changes to the UK Corporate Governance Code. The median shareholding requirement for a FTSE 100 CEO is now 300% of salary, although around one half of CEOs hold shares worth more than 500% of salary.

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