The Government has axed a public list that named and shamed companies hit by major shareholder revolts in what one campaign group decried as ‘another nail in the coffin’ for high boardroom standards.
It follows pressure from corporate lobbyists who objected to leading companies and their directors being put on the ‘naughty step’ over issues such as ballooning executive pay because it harmed their reputation.
In 2017, Prime Minister Theresa May ordered the Investment Association (IA), a trade body that represents fund managers, to keep track of quoted firms where at least a fifth of investors had rebelled at their annual meeting.
The list was meant to improve transparency for shareholders, staff and public by pressuring quoted firms to curb executive excess, as protest votes generally are themselves not binding.
But in a surprise move Business Minister Blair McDougall has told the IA to drop the register ‘to remove duplication’ as part of a series of ‘pro-growth’ measures designed to cut red tape for firms.
The IA confirmed the register was no longer being updated.
Idea: In 2017, Prime Minister Theresa May ordered the Investment Association to keep track of quoted firms where at least a fifth of investors had rebelled at their annual meeting
‘This is another small but significant nail in the coffin of our reputation for high standards of corporate governance,’ said Catherine Howarth of campaign group ShareAction.
‘For the last year, corporate lobbyists have been chipping away all too successfully at standards and structures which protect the investing public, both retail investors and the UK’s vast number of pension savers.’
The decision was ‘disappointing from a government displaying a concerning pattern of disregard for shareholder rights,’ she said.
Corporate governance expert Tom Powdrill said: ‘It is a bit odd to see Labour scrap an initiative intended to restrain executive pay by taking a position less radical than the Conservatives who introduced it.’
The Mail on Sunday’s annual Fat Cat Files, which chart boardroom pay, will continue to publish details of FTSE 100 companies with the largest protest votes.
Our latest survey found the biggest pay revolt at engineering firm Melrose, where two-thirds of shareholders voted against a deal that saw boss Peter Dilnot scoop £45 million. Melrose said it took this ‘very seriously’ and would ‘consider the feedback received’.
Firms are still obliged to report back to shareholders within six months of a shareholder revolt but campaigners fear this rule will also be swept away.
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