LONDON One of Britain's most influential fund managers Standard Life Investments has come out in support of controversial plans to give shareholders greater powers to block executive pay at UK companies.
Edinburgh-based SLI said on Wednesday it is supporting a package of reforms first proposed in June that included making shareholder votes on director pay binding after the government persuaded it the plans would be flexible and workable.
"BIS (The Department for Business Innovation and Skills)... developed proposals that are capable of practical implementation and provide an appropriate blend of flexibility with accountability," Guy Jubb, Standard Life's Global Head of Governance and Stewardship said in an emailed response to Reuters.
The investment manager had initially opposed the plan for binding votes on remuneration, arguing they would be impractical.
The support of Standard Life is significant because with 163 billion pounds ($247 billion) under management it is one of the UK's largest investors and holds significant stakes in many European and British blue chip companies.
Its stance may also help convince other fund firms and industry experts who fear the new rules risk excessive meddling in management of companies by shareholders who may not have the resources to fully understand each firm they invest in.
"We have been persuaded that, taken as a whole, the proposed measures will serve to strengthen shareholders' ability to hold boards to account," Standard Life said in a report on governance released on Wednesday.
Shareholders currently only have an advisory, non-binding vote on director pay. Government proposals to change this were conceived in the midst of an investor backlash against board room pay which had multiplied over a decade in which share prices languished.
Last year saw a number of shareholders vote against pay packages in what became known as Britain's "shareholder Spring".
In May, British insurer Aviva's chief executive Andrew Moss and Sly Bailey, head of British newspaper group Trinity Mirror, became high-profile casualties after shareholders took issue with rebelled against large pay packages, falling profits and poor share performances.
Investors also blocked in June a 6.8 million pounds pay award for Martin Sorrell, head of the world's biggest advertising agency WPP.
Among the examples highlighted by Standard Life of its wrangles with companies over executive pay last year was its opposition to bonuses paid to former Barclays CEO Bob Diamond and Finance Director Chris Lucas.
($1=0.6608 British pounds)
(Reporting by Chris Vellacott, editing by Sinead Cruise and Mike Nesbit)