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Will the shareholder rebels have any impact?

Shareholders at Aviva, UBS, Inmarsat and Trinity Mirror have protested executive pay.

Photograph: Getty Images

There was a wave of shareholder rebellion on Thursday that looked like the release of pent up anger.

Aviva, UBS and Inmarsat all faced fury over executive pay - and Trinity Mirror Boss Sly Bailey resigned as shareholders objected to her £1.7m pay package.  The biggest rebellion was at Aviva, with 59 per cent of shareholders voting against the pay report. 37 per cent voted against pay proposals at UBS, and there was a 40 per cent revolt at the satellite firm Immarsat. 

According to City AM, this is part of a rising trend:

Shareholder activism has been on the increase for some years now. An average 10.5 per cent of FTSE 100 shareholders voted against remuneration reports in 2010-11, nothing compared to the 16 per cent or so in 2002-3, but much higher than the six to eight per cent that was the norm between 2004 and the crisis.

Deborah Hargreaves, chairman of the High Pay Commission, agreed:

"The rebellion is spreading from the banks to other businesses. Shareholders are finally taking more of a stand and waking up to the fact they have been ripped off. This is a result of the economic times we’re living in."

But are the boards waking up? As the Guardian remarked, it seems not.

Aviva's directors seemed stupefied yesterday. The "apology" delivered by Scott Wheway, chair of the pay committee, was nothing of the sort. "We, and I personally, recognise that we can and should have done more to engage with our shareholders," he said. Did that mean he still thinks he got the decisions right? It seemed so: "We believe we made appropriate remuneration decisions in 2011."

Boards' notion that something called "engagement" lies at the heart of their problems was also heard last week at Barclays, where chairman Marcus Agius was sorry for not having done a good enough job "articulating our case". The plea is a cop-out, a weaselly attempt to pretend that shareholders would see things differently if only they understood the facts.

As the vote is "advisory" only, it has no blocking power. But as the action is so rare - this is only the fourth time that a FTSE 100 company has seen investors reject a remuneration report since the process was set up in 2004 - it still can have impact. As the Guardian acknowledges:

....GlaxoSmithKline... was the first member of the FTSE 100 index to suffer a majority vote against its pay report in 2003. That led to a fundamental rethink at the drugs company. Chief executive Andrew Witty is certainly not poorly paid (he took home £5.7m last year) but he earns less than his predecessor and is regarded as doing a better job. Result: 96% approval yesterday for the pay report.

It remains to be seen whether the four rebel shareholder groups will have a similar impact.