Institutional investors have focused on the salary increases, which have become especially relevant in the season of General Shareholders’ Meetings of 2021. This was explained by Claudia Morante, head of corporate governance at Georgeson, a firm that offers communication and information services to shareholders in an online seminar on compensation for directors and senior executives organized by Willis Towers Watson and Cuatrecasas, together with the aforementioned firm. See more articles on sustainability in the Economist Sustainable Investing and ESG .

Every year , the expert emphasized, investors look at the increase in remuneration, but in 2021 “they have been especially exhaustive with this question.” “We have seen a lot of investors going against, or analyzing with great precision” the increases granted by the companies.

The pandemic has been key for this issue to have acquired greater interest. Proxy advisors (entities that advise investors on their vote at meetings) such as Glass Lewis have already stated that they will not support increases in executive compensation of more than 10%, no matter how well founded those increases were.

On the other hand, the seminar analyzed the acceptance that, in 2021, the Annual Remuneration Reports of the Ibex 35 companies have received. The data was, a priori, positive: the average number of votes in favor of these reports exceeded the 85%.

However, the analysis of the votes reveals “several important messages”, according to Georgeson’s expert. In 20 companies of the Ibex 35, the votes against and abstentions add up to more than 10% (when last year this happened only in 14 companies) . In 11 of them, that dissent has exceeded 15%, and in six it exceeded 20%, something that “it is necessary to take into account,” he stressed.

“From our experience, this is an issue that companies must address” , and not only because of the reputational aspects. “It is extremely important that, even if a company’s free float level is small, those investors see that the company takes corporate governance into consideration.”

That level of free float may change in the future, and those investors who have been with the company for a long time should know that they can support it in its decisions, because it is making good progress in terms of corporate governance, he explained.

What does the free float really vote?
The photo of the rejection (or, rather, of the non-support ) of the shareholders to the Remuneration Reports worsens if we look only at the free float (the free float , made up of shareholders who are not majority owners). Dissent (that is, the vote against, or abstention) exceeded 20% in 15 Ibex companies.

In some cases it happens that companies with a vote against just over 10% see that vote against being increased to 80% if we look only at the votes cast by the free float.

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