Over the course of the 2025 AGM season so far, shareholder opposition to executive director pay resolutions has increased across FTSE350 companies compared to 2024. The IA Public Register so far this year reports a similar number of companies receiving 'significant' (20% or more) votes against their remuneration policies and reports as for the whole of 2024, including three outright failures to secure support for remuneration reports.
Potentially fuelled by continuing concerns about the competitiveness of UK pay packages, and likely encouraged by the relaxations to the Investment Association's Principles of Remuneration in late 2024, as predicted a number of companies have pursued pay increases for their executives this year, provoking some negative voting recommendations by ISS Proxy Voting Services and subsequent voting outcomes following suit.
Context is important; there had been a noticeable drop in opposition to pay resolutions in 2024, compared to the previous few years during which opposition figures had remained at a relatively steady level. In 2024 it was apparent that many companies were mindful of a need for restraint, following shareholder turbulence in 2023 concerning "windfall" payouts from LTIP awards granted during the Covid-19 pandemic when share prices were unusually depressed, and a keen focus on the cost of living crisis which lead to further scrutiny of executive pay packages. The debate around the competitiveness of the UK economy and suggestions that certain major companies could move their listings and headquarters away from the UK may also have been a factor in subduing shareholder dissent around proposals to increase executive pay.
As such, 2024 may prove to have been an unusually quiet year, and it may be that shareholder sentiment around UK executive pay is returning to similar patterns as in recent years up to 2023. Proxy advisers and investors continue to expect a clear link between pay and performance, and for companies to be able to justify robustly any pay increases that are out of line with the wider company workforce and demonstrate their link to long-term value creation. Meaningful engagement with shareholders and convincing explanations remain essential for all companies putting forward new executive pay proposals.
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