AppId is over the quota
AppId is over the quota
By Sinead Cruise
LONDON | Thu Jan 19, 2012 10:08am GMT
LONDON (Reuters) - Asset manager Fidelity Worldwide Investment is throwing its weight behind a campaign to give investors greater powers to curb spiralling executive pay, calling for all bonuses to be subject to the approval of a minimum 75 percent of shareholders.
Backing proposals outlined last week by Prime Minister David Cameron , Fidelity said shareholders should have the right to veto rewards before they are paid and that if approval is refused twice, the chairman of the remuneration committee should resign.
"The simple truth is that remuneration schemes have become too complex and, in some cases, too generous and out of line with the interests of investors," Fidelity Worldwide Investment's Equities CIO Dominic Rossi, said on Wednesday.
"We say to remuneration committees: 'Make sure you understand the mood of the market; tell us in simple terms what you propose; and let shareholders decide'."
Fidelity, which runs more than 160 billion pounds in assets, said some individual cases of "inappropriate levels of executive reward" had destroyed confidence in the transparency of the executive pay process, resulting in a situation where all directors are perceived to be over-paid.
Under current rules, shareholder votes on bonuses are advisory, and objections rarely force a change in the board's plans if already sanctioned by a remuneration committee.
Corporate governance watchdogs say this lack of investor oversight has created fertile ground for huge discrepancy between growth in executive salaries and underlying performance in recent years.
FTSE 100 directors' total earnings jumped 49 percent in the last financial year to an average of 2.7 million pounds, in sharp contrast to a near-6 percent decline in the FTSE 100 share index during 2011, according to research published in October by Incomes Data Services.
The public debate on the rapid growth in executive pay and size of bonuses has dominated headlines since the 2008 financial crisis, and has become a major distraction for management and companies, Fidelity said.
Anti-capitalist protesters who targeted many of the world's most important financial centres in 2011, won much public sympathy for their attacks on 'fat cat' pay and rewards being doled out to bankers, broadly seen as the architects of the credit crunch and sovereign debt crisis.
Fidelity said the proposals would simplify the opaque system of rewarding directors, but a poll conducted by Reuters last week showed eight out of 10 fund managers doubted a binding vote on bonuses would lead to more meritocratic pay.
Some respondents said companies needed to offer attractive salaries to retain talent, while others feared binding votes could inflict fresh damage on strained relationships between investors and company boards.
"Shareholders are not in a position to micromanage the companies ... it is not our job to make what are effectively operational decisions," one poll respondent said.
(Reporting by Sinead Cruise, editing by Tommy Wilkes and David Hulmes)
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