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By Chris Vellacott
LONDON, Sept 23 (Reuters) - One of the biggest investors inEuropean companies says it will start voting against boardroompay plans next year unless firms force executives to hold sharesmore than three years before cashing them in.
Monday's warning from Fidelity Worldwide Investment is thelatest instance of shareholder agitation over executive pay,sparked by concerns that some top company officials were liningtheir pockets despite lacklustre results and regardless of payconstraint elsewhere in the economy.
Fidelity, which runs assets of around $240 billion, said ithad conducted a review of more than 300 of Britain's largestlisted companies and found 238 had either no long-term,share-based pay plans in place or ran schemes that had too shorta time frame.
The investment manager said it will vote against companyremuneration reports from the start of 2014 if executives areallowed to cash in shares awarded as part of their pay packageswithin three years.
By 2015 Fidelity expects companies to extend executive shareholding periods to five years or face votes against theirremuneration reports at shareholder meetings, the firm said.
Dominic Rossi, Fidelity's chief investment officer, said thefirm wrote to 400 listed companies across Europe last summerasking them to lengthen long-term investment pay schemes.
"We believe that lengthening incentive schemes will changecorporate behaviour for the better, reducing the temptation tomaximise short-term financial performance and instead promoteinvestment and growth," he said.
Through its mutual funds, Fidelity is among the largestshareholders of many European blue-chip companies.
CAREER SHARES
Rossi has been outspoken on executive pay in recent monthsand applauded plans by British-based bank Barclays, inwhich Fidelity is among the 15 largest shareholders, to cut itswage bill as part of a wider shake-up.
Rossi has also suggested in previous letters to executivesthe introduction of "career" shares which directors must holduntil they leave the company.
A run of high-profile challenges in 2012 to executive paypackages by investors frustrated at rising boardroom salaries ata time of declining share prices cost the jobs of some highprofile bosses, such as insurer Aviva Plc chief AndrewMoss, and became dubbed the "shareholder spring".
Earlier in 2013, Britain's largest investor associationssaid they were teaming up to explore ways of giving shareholdersa coherent voice in dealings with company boards on strategy,including executive pay.
The National Associate of Pension Funds (NAPF), Associationof British Insurers (ABI) and fund management body the IMA -which speak for funds controlling billions of pounds - said theywere acting in response to a government-backed report.
Economist John Kay's report, commissioned by the UKgovernment and published in July 2012, criticised short-termistcorporate culture and recommended shareholders are helped tomore effectively scrutinise management performance.
In July, a report by the UK parliament's Business,Innovation and Skills Committee (BISC) called on the governmentto push the financial industry harder to adopt Kay'ssuggestions.
The report's authors claimed "a cultural change will nothappen without a catalyst" and that the investment managementindustry is not implementing voluntary reforms fast enough.
