Thursday, July 19, 2018
Business

Fresh wave of shareholder protests set to hit FTSE firms

The boards at several big-name companies will face a barrage of investor questions this week, as shareholders flex their muscle over issues ranging from board diversity to executive pay.

British Gas owner Centrica, cinema chain Cineworld and pharmaceuticals titan Astrazeneca are just a few of the firms holding AGMs this week, while oil giant Royal Dutch Shell will convene with its shareholders next Tuesday.

Centrica is under pressure over its lack of gender diversity at board level, and Cineworld may be forced to justify a jump in executive pay. Shell and Astrazeneca are being questioned over large bonuses awarded to their chief executives.

Read more: Cineworld's Regal acquisition could be in trouble as influential group advises shareholders to vote against the deal

“We are definitely seeing more protest from shareholders,” said Russ Mould, investment director at broker AJ Bell.

“Its easy to turn a blind eye when companies are performing well – we've had a long bull run, and in some cases people are happy to let potential problems run because the company is doing well and the share price is going up.

“Its when things don't go so well and the share price starts going down that you tend to find the questions get asked.”

The 2018 AGM season has already seen FTSE names such as Persimmon, Inmarsat and Unilever come under fire after sizeable chunks of their shareholder base protested against pay packets awarded to top brass.

Read more: Persimmon in close shave as almost half of shareholders refuse to permit pay report which awarded boss £110m

Today Centrica, which has one of the least gender-diverse boards in the FTSE 100 with just two women appearing alongside nine men, could see shareholders reject this ratio by voting against the re-election of individual directors.

At a time when institutions such as Legal & General Investment Management have vowed to vote against the re-election of any chairman whose board consists of fewer than 25 per cent women, Centrica should be feeling the heat.

Tomorrow, Cineworld will fall under the spotlight. After completing the takeover of US peer Regal earlier this year, the cinema chain has upped the maximum amounts which its executive directors may receive saying this reflects the “scale and complexity” of the newly combined business.

But shareholder advisory group ISS is recommending that shareholders vote down the remuneration policy, saying that it was “questionable” as to why the CEO and deputy CEO needed such significant increases to pay and incentives when they already owned large stakes in the business.

Astrazeneca, meanwhile, has faced criticism from ISS even though it has slashed its CEOs pay packet. The advisory firm questioned why Pascal Soriot deserved 87 per cent of his maximum bonus, in a year when profits have shrunk.

The UK-based pharmaceuticals giant was keen to point out that bonuses depended on factors other than profit, and that Soriot was helping to turn the business around after it struggled following the expiry of several patents.

Read more: Investors eye a turnaround at AstraZeneca following progress on new drugs

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