Governing governance

21 May 2015 By Robert Cole

Two-fifths of FTSE 100 companies are heeding calls to reform bosses’ long-term incentive plans. But several of reformer-in-chief Fidelity’s UK quoted fund manager peers are yet to sign up. They should be championing governance best practice. Non-compliance merits explanation.

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Fund managers Legal & General, Old Mutual, Prudential and Schroders are absent from a list of 42 FTSE 100 companies that Fidelity says operate executive long-term incentive plans with holding periods of five years or more. The list was published on May 21.

Dominic Rossi, global chief investment officer for equities at Fidelity Worldwide Investment, said: “In 2012, as part of the wider debate on executive pay, and with the need to simplify and align it better with long-term decision making, Fidelity took the view that the standard three-year LTIP was too short.

“We decided to use the new binding vote on pay to compel companies to extend LTIP share holding periods to five years. We are delighted to see the progress made, with more FTSE 100 companies today endorsing five-year holding periods than three years. There is still work to do, particularly with smaller companies, but we have come a long way in less than three years.”

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