As we recently reported, 2017 is the year when most FTSE100 companies will be putting their new remuneration policies to a shareholders’ binding vote, against an increasingly hostile background of criticism of the size and complexity of directors’ pay packages.

For the early starters in the FTSE100, there have already been casualties.  Imperial Brands withdrew the resolution to approve a new remuneration policy at its AGM in early February, saying “A considerable number of shareholders supported the policy during consultations, but over time views changed and in these circumstances we believe the right course of action is for the Board not to seek shareholder approval for the new policy”.  It will have to fall back on its existing policy.

Thomas Cook received a 21.7% vote against its new remuneration policy.  Shareholders also voted 22.5% against the remuneration implementation report and 32.7% against the introduction of a new 2017 Strategic Share Incentive Plan.  According to the guidance on directors’ remuneration reporting issued by the GC100 and Investor Group, any vote over 20% should be viewed as “substantial” and in such a case the company should report the measures it has taken to address shareholder concerns.  Good as gold, the company added to its announcement of the AGM results an explanation of what it considered was the issue (“there remain concerns about the level of information around the possible strategic objectives and the size of the maximum potential award” under the new plan) and the action it would take (not to use the new plan in the coming year and to consult fully with major shareholders about its rationale and strategic objectives).

There was also a 15% vote  (reportedly from Standard Life) against the re-election of each of the directors on the remuneration committee, an action forewarned in publications by Hermes, Institutional Investor Services and the Pensions and Lifetime Savings Association.

David Cummings from Standard Life recently said on the Today programme that chairs of remuneration committees are “too obsequious” when it comes to CEO pay and that shareholders must signal more clearly that they are not happy.  Investors must work together to try to limit pay rises because if not, the Government is likely to introduce more Draconian measures, which will be far less flexible.  The week before, the chairman of the FRC, Win Bischoff, said that if Theresa May is talking about tackling excessive pay, to prevent legislation, shareholders will have to be much more prescriptive on remuneration and take their stewardship role more seriously.

Contrast this with recent statements on behalf of the Investment Association, which says it is sinking under the weight of submissions from companies of new remuneration policies and plans, expecting it to rubber stamp them before they are put to shareholders.  Investors have made noises for some time about wanting consultations with companies to be about wider strategy, rather than being hijacked by remuneration.

There seem to be a lot of potentially conflicting issues here, suggesting that there might be another “interesting” AGM season ahead ….