Report cites gap between exec pay, FTSE 100 company performance

Source: Paulina Pielichata, Pensions & Investments, November 28, 2018

A third of FTSE 100 companies have dissonance between executive pay and performance, a report from CGLytics shows.

In its annual proxy review published Wednesday, the analytics and intelligence firm said the average total shareholder return for FTSE 100 companies decreased to 8% in 2017 from around 12% in 2016. During the same period average total CEO compensation increased 5.5% to £4.9 million ($6.3 million).

In 2017, companies with the largest pay vs. return misalignments were WPP PLC, CRH PLC and Sky Ltd., respectively. On a three-year basis, Shire PLC had the widest such gap, followed by Lloyds Banking Group PLC and WPP respectively…..

Getting Ready for the Next Proxy Season: 2018 FTSE 100 Proxy Review
Source: CGLytics, 2018
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….2018 Proxy Season Highlights

Last season brought some interesting highlights as the executive remuneration policies were due for renewal and up for voting. CEO pay continued to be an area of concern for shareholders as pay equity, transparency, executive pay levels,and pay for performance continued to ratchet higher.
• The average votes in favour of the remuneration report fell slightly lower than the previous year with corporations experiencing significant push back on remuneration policies that investors felt lacked clarity and enough disclosures.
• Investors paid more attention in setting a ceiling for total realised pay that directors could earn and engaged actively on the performance metrics of company remuneration plans.
• A study performed by CGLytics showed that almost a third of the FTSE 100 companies have significant misalignment between pay and performance on a one and three year basis. Please refer to the Appendix for CGLytics’ annual FTSE 100 Pay for Performance Overview. It outlines the total CEO realised compensation and company Total Shareholder Return (TSR) performance for all FTSE 100 constituents against their peers in the index…..