Advertisement

Fidelity threatens rebellion on executive pay

Fund management group Fidelity has declared war on excessive executive pay.

Fund management group Fidelity Worldwide Investment has attacked long-term incentive plans (LTIPs). With these, executives can cash in shares if they hit particular targets and hold the shares for a certain amount of time, typically three years. Fidelity wants them to hold them for five years.

It says this should reduce the temptation for executives to "maximise short-term financial performance" in order to get their hands on the share awards, and instead make them concentrate on promoting sustainable growth and long-term investment. Fidelity has threatened to vote against remuneration reports at firms that ignore this suggestion.

What the commentators said

One issue they need to focus closely on, as Robert Peston pointed out on BBC.co.uk, is the nature and complexity of the targets in these LTIPs. They typically "run to many pages of formulae and clauses, such that they are impossible to understand". So naturally the suspicion is that this makes it far easier for directors, and the remuneration consultancy industry that supports them, to game the system and thus add huge amounts to their basic pay under shareholders' noses. Even if that's not the case, why can't we have pay agreements that "someone who isn't a grandmaster in 3D chess might be able to grasp"?

Advertisement
Advertisement

Recommended

Visit/investments/investment-strategy/601044/broker-safety-your-questions-answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Visit/investments/investment-strategy/600861/how-demographics-affects-stock-valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/investments/stockmarkets/600634/why-investors-should-be-cautiously-bullish-for-2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Visit/investments/investment-strategy/601387/how-john-maynard-keynes-learned-the-folly-of-market-timing
Investment strategy

How John Maynard Keynes learned the folly of market timing

In an extract from his book The Sceptical Investor, John Stepek explains how the great economist John Maynard Keynes came a cropper when he first star…
25 May 2020
Visit/investments/stockmarkets/emerging-markets/601362/a-new-lease-of-life-for-the-brics
Emerging markets

A new lease of life for the Brics

Emerging markets are having a surprisingly good crisis. Their long-predicted rise will now continue.
24 May 2020
Visit/investments/investment-strategy/601379/battling-volatility-the-benefits-of-an-active-manager
Sponsored

Battling volatility: The benefits of an active manager

SPONSORED CONTENT – Alastair Wilson, managing director of Close Brothers, on the advantages of active investing in times of crisis.
21 May 2020