Northern investors are still prepared to revolt

The study suggests that shareholders in Northern firms are more inclined to challenge executive pay and under performing management than some of their counterparts elsewhere.

Halfway through the AGM season, indications are that the “shareholder spring” has re-emerged among more than one in eight of the North’s listed businesses, according to professional services firm KPMG.

However, the study found that dissent on pay has reduced significantly among larger listed companies UK wide.

The analysis carried out by KPMG of shareholder voting at the annual general meetings of Northern headquartered businesses, up to May 31, found “significant levels” of dissent at 13 per cent of them.

Of the 243 companies across the UK that held their AGMs before June, 21 were in the North.

The hallmark of dissent is more than 20 per cent of shareholders voting against the remuneration report.

This compares with a UK average of 11 per cent, which drops to three per cent when considering the country’s largest corporations – the FTSE 100.

Chris Barnes, head of reward at KPMG in Leeds, said yesterday: “With over half of the voting season done, it seems fair to say that we’ve seen something of a resurgence of the ‘shareholder spring’ among the North’s listed businesses.

“Where we have seen shareholders objecting, it’s been similar to last year, in that the dissent relates to specific circumstances and issues.

“These are usually not solely pay related, but instead driven by a combination of dissatisfaction around corporate performance and the leadership of the business.”

According to KPMG, the reduction in shareholder dissent on pay at the larger end of the market is likely to be a result of the efforts being made by big companies to improve their procedures, including communication about their pay policies.

Mr Barnes said: “Perhaps there is an element of catching up to be done by some Northern plcs with the very largest blue chip companies, which tend to spend more time and resources on shareholder communications.

“It is reassuring to find that a higher than average proportion of listed businesses in the North (23 per cent) are addressing this by preparing for the adoption of the main elements of new regulations on pay reporting, which come into force next year.”

This compares with 10 per cent of companies taking the same steps nationally.

According to KPMG, this figure is likely to be lower due to the dominance of the big companies, which tend to give large amounts of data on their remuneration policies already, although it may not be in the same format as will become mandatory next year.

Companies will need to produce two reports on pay.

The first report will set out their remuneration policy for the next three years for shareholder approval, in what will be a binding vote; unlike today where the vote is only advisory.

The second report will focus on the company’s implementation of existing remuneration practices.

According to KPMG, companies will have the delicate task of formulating a policy that shareholders will approve, which also gives the Remuneration Committee the ability to exercise discretion.

Mr Barnes said: “Companies face a triple challenge. Shareholders are more willing to challenge poor remuneration practices and corporate under-performance, in what remains a challenging economic environment.”

Companies will also need to replace a large number of long-term incentive plans in the next few years, and adopt the new remuneration reporting requirements by next year.

“These factors mean that the focus on remuneration will continue,” Mr Barnes added.