June 19 (Bloomberg) -- The Association of British Insurers and the Investment Management Association, which represent U.K. investors with 5.5 trillion pounds ($9 trillion) of assets, said they favor legally binding shareholder votes on executive pay.
Requiring companies to gain shareholder approval for compensation plans would give investors more control over how and how much executives are paid, the heads of the ABI and IMA told parliamentarians at a Treasury Committee hearing in London today. Votes on pay are currently advisory in the U.K.
“When you talk about a binding vote on future pay policy, I think the opportunity is created for investors to express a view on the appropriateness of the balance that’s being struck in the incentivizing of senior executives,” said Otto Thoresen, director general of the ABI.
Investors at FTSE 100 firms including Aviva Plc, Barclays Plc and WPP Plc rebelled against or rejected pay reports at this year’s annual general meetings for being too generous and not reflecting the companies’ performance. U.K. Business Secretary Vince Cable backed binding shareholder votes earlier this year.
“Binding votes are a potentially helpful development,” said Richard Saunders, the IMA’s chief executive officer.
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