Tuesday 16 January 2018

Fidelity warns firms to overhaul executive pay

Louise McBride

Louise McBride

Fidelity, one of the world's largest fund managers, has warned CRH and other firms to overhaul their executive pay – or face the prospect of having remuneration proposals voted down at annual general meetings.

In summer 2012, Fidelity Worldwide wrote to 400 publicly quoted companies across Europe encouraging them to reform the long-term incentives of chief executives. Fidelity wants executive pay in the firms it invests in to be more closely linked to the performance of a company. In particular, it wants companies to extend the time that executives can hold shares for – from three to five years – before those shares can be sold.

Fidelity last week urged companies to speed up the reform of their executive pay after it found that only 14 companies on the FTSE 350 had long-term incentive schemes that extended to five years.

A spokesman for CRH – which is listed on FTSE – confirmed that it was one of the companies that received a circular from Fidelity in July 2012 "outlining a change in their [Fidelity's] remuneration principles".

"CRH is currently undertaking a review of its remuneration policy to ensure that the group continues to adopt best practice and to meet the new British remuneration requirements," said a spokesman for CRH last week.

"An integral part of this review is a detailed consultation process with institutional shareholders. The group's remuneration policy will be put to a vote of shareholders at the 2014 AGM."

Shareholder revolts over executive pay have forced some of the largest companies on the London Stock Exchange to overhaul their remuneration packages. Shareholders in Irish companies have also become increasingly irate over the issue.

Earlier this month, more than one-third of Ryanair shareholders voted against the carrier's bumper executive bonus scheme.

Last year, almost one in four shareholders voted against executive pay at Michael Carvill's mining company, Kenmare, with 23 per cent abstaining.

Sunday Independent

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