Fidelity demands controls for boardroom pay

Published on Thursday 19 January 2012 00:00

THE UK government’s campaign to curb excessive executive pay through shareholder power has drawn support from one of the world’s biggest asset managers.

Fidelity Worldwide Investment has called for all bonuses to be approved in advance and each year by at least 75 per cent of shareholders. If a scheme fails a second time the chair of remuneration would be forced to resign. Shareholder votes on bonuses are currently advisory.

The asset manager said its proposals would go a long way towards increasing accountability in executive pay, adding that change was needed “as individual instances of inappropriate levels of executive reward have destroyed public trust and led to a situation where all directors are perceived to be over-paid”.

Dominic Rossi, chief investment officer of equities, said: “The simple truth is that remuneration schemes have become too complex and, in some cases, too generous and out of line with the interests of investors.”

Total pay to FTSE 100 directors surged by 49 per cent in the last financial year to an average of £2.7 million.

Fidelity, which has some £165 billion in assets, said remuneration committees needed to understand the mood of the market.

“Companies have nothing to fear if what they propose is fair and reasonable and clearly aligned to what is good for long-term shareholders,” Rossi added.

KRISTY DORSEY

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