Fidelity Worldwide makes more moves on board pay

FUND manager Fidelity Worldwide has told Britain’s top executives that their performance should be measured on a minimum five-year period in an
effort to “fully and transparently” align the interests of investors and board directors.

The investment giant – one of the largest shareholders in the FTSE 100 – has revised its “principles of ownership” to require that directors wait at least five years before selling any shares awarded as part of a pay deal.

Fidelity also wants executives to retain a portion of all stock granted for the duration of their employment in the form of
“career” shares.

The move is another advance for the growing move to curb excessive pay, as most company incentive schemes allow for shares to be sold after one to three years.

Dominic Rossi, global equities chief at Fidelity, said the change was implemented after several years of pay increases for top executives of companies whose returns to shareholders have been poor.

“Whilst we believe that the remuneration committee of the board has the primary responsibility for determining board pay we have come to the view that these policies should be subject to shareholder approval. This will ensure better alignment between the interests of owners and managers,” he said.

Fidelity said the change in policy will dictate how it votes on matters of executive remuneration. The move follows the publication earlier this week of the Kay Review into short-term profit-seeking in equity markets. It also recommended stronger links between pay and long-term performance.