Photographer: Angelo Arcadi/Getty Images

Shareholder Unease Grows Over Executive Pay Following BP Vote

  • Anglo American may face similar investor revolt next week
  • Shire investors being urged to vote against remuneration plans

Companies are facing increasing investor unease over executive pay as discontent grows about disproportionate compensation.

Anglo American Plc and Shire Plc are among those that may face shareholder pushback in coming weeks when they seek to approve remuneration packages for top executives. That’s after investors opposed pay plans at BP Plc and medical-device maker Smith & Nephew Plc on Thursday.

Shareholders are speaking out against executive pay that they deem excessive. The revolts are reminiscent of the “shareholder spring” of 2012, when investors opposed pay awards for top executives and in some cases overturned them. Aviva Plc’s Chief Executive Officer Andrew Moss quit that year after stakeholders disagreed with the firm’s compensation plans even though he waived a salary increase.

“It is too early to assess the full extent of the fallout from these latest shareholder rebellions,” Glass Lewis & Co LLC, a corporate governance adviser, wrote in a blog post on its website Friday. “It is clear that remuneration structures and levels of pay continue to be areas under intense scrutiny from both investors and the general public.”

More than 59 percent of BP shareholders voted in protest on Thursday at the oil company’s decision to award Chief Executive Officer Bob Dudley a 20 percent pay increase. The company reported a record net loss last year of $6.5 billion and announced thousands of job cuts following a slump in the price of oil.

Similar Revolt?

Smith & Nephew’s pay report was opposed by 53 percent of shareholders at its annual general meeting the same day.

Anglo American may face a similar revolt next week after corporate governance advisers Institutional Shareholder Services Inc. and ShareSoc recommended investors reject the mining company’s remuneration report. Chief Executive Officer Mark Cutifani’s total compensation fell 8.3 percent last year to 3.4 million pounds ($4.8 million) even as Anglo was the worst performer in the FTSE 100 Index, losing 75 percent of its value.

Shire investors have been urged by Institutional Shareholder Services and Glass Lewis to vote against remuneration plans at the April 28 annual meeting, according to Brooke Clarke, a spokeswoman for the Dublin-based company. Shire boosted Chief Executive Officer Flemming Ornskov’s compensation fivefold last year to allay concern he might be wooed away by a rival following his “exceptional performance.”

WPP Plc’s Martin Sorrell, head of the world’s largest advertising company, may get almost 70 million pounds in bonus and salary for 2015 as Britain’s highest-paid CEO. Most of that consists of a controversial incentive plan which triggered protests from some shareholders and public-interest groups monitoring executive compensation.

Before it's here, it's on the Bloomberg Terminal.