Big pay packages spark growing dissent among UK shareholders
Three times as many companies faced opposition from more than 20 per cent of shareholders so far this year compared with the same period in 2024. PHOTO: BLOOMBERG
LONDON – Shareholder dissent over executive pay at British companies is rising just as firms seek to bolster pay packages to remain internationally competitive.
Three times as many companies faced opposition from more than 20 per cent of shareholders so far this year compared with the same period in 2024, data from proxy-solicitation firm Georgeson shows.
With investors having already voted on remuneration reports from more than half of Financial Times Stock Exchange (FTSE) 350 companies, 16 faced dissent exceeding 20 per cent between Jan 1 and May 31 in 2025, up from five in 2024, the data shows.
'In 2024, FTSE 350 companies were more conservative in recommending higher levels of pay, which led to high shareholder support and low levels of opposition,' said Mr Daniel Veazey, Georgeson's corporate governance manager.
Pay packages of UK-based chief executive officers (CEO) have grown faster in 2025 than those of US rivals, with companies racing to close the gap to attract and retain top talent. The median FTSE 100 CEO package increased 7 per cent to £4.79 million (S$8.24 million) in 2024, according to Deloitte.
'UK public limited companies are feeling freer to propose new remuneration policies designed to remain competitive with US and EU peers,' said Ms Sonia Gilbert, Clifford Chance's incentives partner.
London Stock Exchange Group came up against a shareholder revolt at its annual meeting on May 1, with 31 per cent voting against the company's remuneration report, which saw CEO David Schwimmer take home £7.9 million in its latest financial year. Consumer giant Unilever also faced close to 30 per cent opposition against new boss Fernando Fernandez's base salary, which was just modestly short of his predecessor's.
UK companies are challenging the status quo a little more this year, encouraged by widespread shareholder support in 2024 and relaxed Investment Association guidelines on pay, Georgeson's Mr Veazey said.
Of 55 FTSE 100 companies that had published their fiscal 2024 reports, 24 were seeking shareholder approval for new remuneration policies, compared with 16 at the same time the year before, research by Deloitte in April shows. Of those proposing changes, more than 40 per cent submitted their policies ahead of the usual three-year cycle.
British American Tobacco's CEO Tadeu Luiz Marroco could earn as much as £18.2 million this year under a performance-related policy, a jump from the £6 million he earned in 2024. Compass Group's Dominic Blakemore also stands to benefit from a proposed maximum payout of £15.3 million in 2025, up from the £9.5 million he earned in total in 2024. Both maximum figures are based on a 50 per cent increase in the stock awards from the date of grant to vesting.
These proposals highlight 'the need to attract top talent in a competitive global market and address pay compression challenges', said Mr Mitul Shah, a partner at Deloitte's executive remuneration and rewards practice.
The UK government's decision to maintain the removal of the cap on banker bonuses has gone some way to bridging the transatlantic gap. Bank of America is the latest to join a slew of rivals in scrapping the crisis-era limit. Some of the world's biggest banks are pushing UK regulators to accelerate plans to ease rules around deferred bonuses so they can apply the lighter regime to payouts for 2025.
This follows long-time calls by executives including LSEG CEO Julia Hoggett that restrictions on pay were hindering companies' efforts to attract game-changing candidates and undermining the attractiveness of the City of London.
Performance, especially in sectors with key competitors in the US and a tight market for talent, will ultimately steer how amenable shareholders are to boosting compensation.
'It comes down to the right shareholder engagement,' Clifford Chance's Ms Gilbert said. BLOOMBERG
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Mohamed Rafik, 55, a partner at Arcade Money Changers, a stall opposite Haleem's, remains optimistic. His evidence is that there are new licensees entering the industry who wouldn't do it if they couldn't make a living. 'Money changers won't go out of business,' said Rafik, while handling cash and paper receipts on a busy afternoon. Digital payment wallets may seem attractive now, but the companies also have overheads and may try to increase rates in the long run, he predicted. Right now, a thriving tourism industry is driving demand during the summer school holidays. Singapore is close to South-east Asian holiday hotspots like Phuket in Thailand, Vietnam's Ha Long Bay and Bali, Indonesia, where cash is still needed to pay for food at street stalls or small restaurants, or to offer tips. Travellers with cash also avoid the higher exchange rates and foreign transaction fees imposed by many credit cards. 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Customers throng the narrow passages to scrutinise buy and sell rates at tightly packed stalls, which are required to post rates on electronic screens. Frugality gives them an edge against the financial institutions that occupy the opulent towers surrounding Raffles Place, according to Rafik at Arcade Money Changers. The changers will survive even if digital platforms cut their margins to zero to gain market share, he said. Congregating in one location attracts more customers, but it also pares margins to the bone. Foreign currency bought at a commercial bank can cost 1 per cent to 4 per cent or more once you factor in a poorer exchange rate and transaction fees. At City Money Changers, it's a high-volume, low-margin business where Haleem typically makes fractions of a penny on the dollar in a swap. 'Everybody wants to see the best price so they will shop around,' he said, while taking a break from his tiny kiosk. On Thursday afternoon, Haleem's stall was selling the greenback at S$1.2900, versus the S$1.2972 offered by DBS Group Holdings, Singapore's largest bank, on its retail app. The cash exchange rate wasn't as favourable as YouTrip's rate of S$1.2877 per US dollar. With all this cash on hand - some changers can turn over S$500,000 a day, he says - you'd expect to see armed guards all over the plaza. Not in Singapore, where violent crime is almost non-existent. Instead, the stall-holders rely on security cameras - there are some 90,000 across the city - to monitor activity. The dealers are the eyes and ears for each other, on the alert for any suspicious customers. Regulators have scrutinised the industry in the past, concerned about the potential for money laundering. In 2016, the Monetary Authority of Singapore cited a Raffles Place currency changer, along with other banks, for their roles in the scandal at 1MDB, the Malaysian sovereign wealth fund. The probe revealed inadequate risk management practices at the changer, and failure to identify the beneficial owners of funds. Money changers are now required to conduct customer due diligence measures for cash transactions exceeding S$5,000, or for those topping S$20,000 where the money is funded from an identifiable source like a bank account. That includes verifying customers' identities and keeping proper transaction records. The industry poses a 'moderate level' of money-laundering threats due to its cash-intensive nature, said a spokesperson for the MAS, the country's financial regulator. Haleem, who's been at this trade for 40 years, concedes that the future isn't all bright for his industry. Business is about half that of pre-Covid levels, and the increased competition is eroding margins, while wild currency swings can leave him sitting on devalued cash overnight. He predicts the trend toward digital payments is only going to accelerate. 'It will become worse and worse,' he said, though he thinks there will always be a little room in people's wallets for cold hard cash. One floor up at Crown Exchange, Thamim A.K., a money changer in his 60s, is more sanguine. Sitting in a backroom surrounded by wads of Korean won and Indonesian rupiah, he says his 40 years of trading, with all its ups and downs, gives him hope for the future. 'I've seen everything, all the currencies, fluctuations,' Thamim said. 'The bank notes business is still there. It's growing, in fact. It's fighting with digital.' BLOOMBERG
