Fidelity Worldwide Investment, which oversees about $257 billion in assets, said it will vote against executive compensation plans unless companies extend the minimum periods for bonuses to pay out.
The money manager wrote 400 publicly traded European companies last summer urging boards to lengthen the period that executives must own shares to five years before they are allowed to sell, Fidelity, the world’s second-largest mutual fund manager, said in a statement today. If they don’t, Fidelity said it will vote against company compensation reports.
“We have not set out to be radical nor confrontational,” Dominic Rossi, Fidelity Worldwide’s global chief investment officer of equities, said in the statement. The proposal requires “an executive to hold more shares for longer, rather than cashing them out at the earliest opportunity. This results in a far better alignment between executive compensation and the long-term performance of the company.”
Starting in January, Fidelity said it will require companies in the U.K. and Europe to extend the holding period to more than three years. The period must then be extended to five years by January 2015, it said.
The Financial Times reported Rossi’s comments earlier today.