Using voting data available on the AQTION platform, the article explores why some of the world’s largest institutional investors voted against executive compensation at ten leading banks this year.
Key findings highlighted by Paola Valentini include:
- UniCredit: Aberdeen Investments raised concerns over a significant salary increase and bonuses tied to extraordinary operations. Candriam Investors cited unjustified one-off awards in addition to a base salary increase exceeding 10%, without a clear rationale.
- BPER: PGGM Investments flagged that long-term incentive guarantees as not sufficiently performance-based.
- Intesa Sanpaolo: Allianz Global Investors called for transparency on objectives, outcomes to better asses the link between incentives and company performance.
- Bank of America: Aegon Asset Management criticised the discretionary nature of short-term pay decisions, which led to a misalignment between pay and performance. DWS Investment noted a lack of disclosure regarding both financial and ESG metrics for variable remuneration. Legal & General Investment Management opposed the package due to private jet use and insufficient performance linkage in equity awards.
- UBS: Allianz Global Investors opposed incentive plans that allow payouts despite underperformance and called for greater clarity in the disclosure of remuneration policy, indicators, performance results, and final outcomes.
- Goldman Sachs: Aberdeen, Legal & General, and Robeco opposed excessive $80 million retention awards to the CEO and COO, citing a lack of performance conditions and overlap with existing incentive plans. Florida State Board of Administration flagged pay-for-performance misalignment, while Norges Bank Investment Management advocated for simpler pay structures based mainly on restricted stock held for 5-10 years, regardless of resignation or retirement.
The article also presents highlights from the second edition of Stewardship in AQTION study, including:
- Proxy Advisor Use: ISS remains the most widely used provider, followed by Glass Lewis
- High-Profile Votes: AQTION’s analysis of Top 65 investors’ votes at major 2024 general meetings, including the controversial approval of Elon Musk's billion-dollar pay package at Tesla, suggests that European asset managers are more inclined to challenge management through voting, while U.S. investors remain comparatively cautious.
The full article can be accessed using this link.
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