There is a strange habit in UK corporate governance. When investors and proxy advisers dislike a company’s remuneration policy, the default response is often to recommend a vote against the chair of the remuneration committee.
It is meant to signal accountability. In practice, it is frequently inappropriate, clumsy and ineffective. Recent debates around executive pay at large listed companies, including Pearson, show why this deserves much closer scrutiny.
The latest Pearson remuneration debate is a useful case study because it contains nearly all the features that make executive pay governance difficult. The company’s proposed policy is broadly aligned with UK best practice on structure and disclosure, yet it is also plainly aggressive on quantum, especially the proposed 850% LTIP ceiling for the CEO.
That mix matters. Pearson has not produced a lazy or opaque policy. It has disclosed the rationale at length, cut the CEO’s pension to a flat allowance of £18,000, frozen base salary for 2026, increased shareholding expectations, and tightened long-term incentive stretch with demanding earnings growth and TSR requirements. Yet ISS and Glass Lewis are still recommending a vote against the policy, primarily because the maximum LTIP opportunity sits well above typical FTSE 100 levels.
This is exactly the kind of situation where a thoughtful investor should pause before endorsing a reflexive “vote against the RemCo chair” response. Discomfort with quantum is not the same thing as evidence of poor committee leadership.
The biggest weakness in the standard proxy playbook is that it personalises what is usually a collective governance judgement. Remuneration policy is led by the remuneration committee, but it is approved by the board and shaped by the company’s talent market, strategic direction, investor base and legacy arrangements.
In many cases, the RemCo chair is not the architect of a simplistic pay grab. The chair may instead be the person who has reduced fixed pay, increased conditionality, strengthened disclosure and spent months consulting shareholders to narrow disagreement. If that person is then used as the default vessel for protest, the message becomes muddled. It says less about whether governance is good or bad and more about the system’s need for a visible scapegoat.
That is one reason the sanction often feels performative rather than analytical. It collapses a complex debate about talent, value creation, risk, benchmarking and market context into a single gesture of disapproval directed at one director.
There is a difference between a badly governed remuneration policy and a controversial one. A badly governed policy is opaque, weakly conditioned, poorly disclosed and disconnected from both performance and wider workforce realities. A controversial policy, by contrast, may still be highly structured, strongly performance-linked and responsive to prior shareholder concerns, while remaining uncomfortable on quantum or peer choice.
ISS’s own framework reserves the right to recommend votes against compensation committee members and potentially the whole board where compensation practices are considered unsatisfactory. That sounds robust, but in practice it can produce a standardised sanction even when the underlying issue is not weak governance but a disagreement over how much flexibility boards should have in a global talent market.
That is what makes the sanction feel blunt. The same remedy can be deployed against a committee that has done little to improve an obviously poor design and against a committee that has demonstrably consulted, adjusted and increased performance stretch but still believes a higher cap is needed to compete.
The current system is especially frustrating because proxy advisers often say the right things in principle. Both ISS and Glass Lewis have emphasised in policy updates that context matters, that peer groups should reflect strategic and talent realities, and that boards should be judged in part on their responsiveness after prior dissent.
Yet cases like Pearson suggest that these principles are not always carried through consistently. Pearson has argued that its peer group should reflect the market in which it competes for executive talent, which includes global AI, technology and B2B skill-based businesses, rather than a simple FTSE 100 index set. It also says it has adjusted for size by benchmarking mainly against CEO-1 roles at larger peers and has disclosed that a more conventional US comparison could support an even higher target package than the one proposed.
Despite all this, the principal criticism from ISS and Glass Lewis still appears to come back to one core point: the CEO’s LTIP opportunity significantly exceeds UK FTSE 100 norms. That may be a fair concern, but it also exposes a tension in the proxy logic. If context and talent markets truly matter, then index comparisons should not quietly reclaim centre stage whenever the number gets uncomfortable.
The same inconsistency appears on responsiveness. Pearson has publicly acknowledged prior opposition, revisited the structure, reduced fixed pay and produced unusually full disclosure. If that still leads to a fairly mechanical “against” recommendation, boards are entitled to wonder what kind of responsiveness would ever be enough.
There is also a practical problem. Voting against the RemCo chair does not always change behaviour in a useful way. It may generate headlines or a tidy governance score, but it often fails to give boards a clear map of what needs to change.
Farient’s analysis of Say-on-Pay voting found that when both ISS and Glass Lewis recommend “against,” median support drops sharply to around 54%, and 39% of such companies fail to secure majority support. That shows these recommendations are powerful. It does not show they are precise. Power and precision are not the same thing.
What often happens instead is one of two things. Boards either entrench and continue defending the policy on strategic grounds, or they retreat into box-ticking redesigns built to appease proxy screens rather than support the company’s actual talent and performance needs. Neither outcome is especially attractive for long-term investors who say they want thoughtful, business-specific governance rather than formulaic compliance.
This debate has an awkward diversity angle that is rarely discussed clearly enough. Data on UK boards suggests that remuneration committees are one of the few places where women are relatively well represented in chair roles. Sam Allen Associates reports that 53% of FTSE 100 RemCo chairs are female, and around 30% of RemCo chairs across the FTSE indices are women.
That matters because research also suggests women on remuneration committees can strengthen oversight. A study of UK say-on-pay found that gender diversity on remuneration committees significantly shapes shareholder dissent and that women become more effective monitors once they reach a critical mass on the committee. In plain English, getting women into these seats appears to make a difference.
This creates a genuine irony. One part of the governance system says boards should improve gender balance and place more capable women in positions of influence. Another part then reaches instinctively for “vote against the RemCo chair” whenever it wants to express discomfort with executive pay. Since RemCo chairs are disproportionately female, that sanction is not gender-neutral in its practical effect.
The result can be counter-intuitive from a DEI perspective. Women are encouraged into one of the toughest oversight jobs on the board, then turned into routine lightning rods for pay protests even where the underlying issue is a broader disagreement about market competitiveness, not poor judgement or weak stewardship.
The pattern is broader than Pearson. Reviews of recent AGM seasons by governance groups note multiple cases where proxy advisers recommended against remuneration policies and, in some instances, against committee members, even where companies had provided detailed rationale and believed the policies were justified by strategy or market context.
The Quoted Companies Alliance has been particularly critical of the proxy advisory industry’s tendency toward inconsistency and over-simplification, arguing that companies can face rigid assessments that are not always proportionate to the underlying governance issue. Meanwhile, recruitment advisers interviewing FTSE 100 RemCo chairs report a recurring frustration that proxy responses can feel like “computer says no,” with limited room for nuance or context.
The point is not that every company with a contentious pay policy deserves sympathy. Some plainly do not. The point is that the current sanction structure often lacks diagnostic precision. It can punish chairs who are actually doing many of the things investors say they want: consulting, disclosing, strengthening stretch and aligning more of pay with long-term ownership.
A more intelligent stewardship approach would use the remuneration report and remuneration policy votes properly, and reserve votes against the RemCo chair for cases where there is a clear pattern of poor judgement, weak responsiveness or materially defective process.
Three principles would improve things:
Vote against the policy when the structure itself is unacceptable, and explain specifically which elements make it unacceptable.
Vote against the report when the operation of the policy in the year was poor, for example because discretion was misused or performance outcomes were clearly misaligned with shareholder experience.
Vote against the chair only where there is evidence that the committee has failed in stewardship, such as repeated disregard of shareholder concerns, poor disclosure or weak process.
That would make the sanction more credible because it would connect the vote to the actual governance failure rather than to the convenient existence of a visible committee head.
Boards should also stop behaving as though proxy recommendations are immutable facts of nature. Where companies believe ISS and Glass Lewis have got the substance wrong, they should push back directly, clearly and with evidence.
A more confident playbook would include:
Reframing the debate around realised pay, not headline opportunity. Companies should show clearly what executives receive at threshold, target and maximum outcomes, and map those outcomes to actual shareholder returns and earnings delivery.
Forcing clarity on peer groups. If advisers say a bespoke talent-market peer set is wrong, companies should ask what peer set they would regard as appropriate and why.
Documenting responsiveness in a simple scorecard. Boards should list prior investor concerns and show how each one has been addressed through consultation, structural changes, disclosure or discretion.
Segmenting shareholder engagement. Top active holders should hear the case directly, rather than through a proxy adviser summary that compresses a nuanced design into a binary recommendation.
Explaining the human and strategic context. High-calibre RemCo chairs, especially those who have invested time in consultation and design improvements, should not be left to absorb protest votes without boards making the case for their judgement and stewardship.
This is not about attacking proxy advisers for the sake of it. It is about reminding the market that proxy research is an input, not a verdict.
There is another weakness in the current system. Retail investors and younger shareholders rarely see ISS or Glass Lewis reports, even though the recommendations can shape voting outcomes materially. Much of the debate therefore takes place inside a relatively closed stewardship ecosystem, while a growing share of the investor base is left outside the room.
That matters because the investor base is changing. Younger retail investors, creators and finfluencers increasingly shape how companies are perceived, how governance is translated into public language and how trust is built outside traditional institutional channels. If remuneration legitimacy is becoming more contested in public, then boards and investors both need broader, clearer and more inclusive ways to explain how pay works and why particular structures are justified.
Relying on an old proxy ritual, where a handful of advisory firms issue “against” notes and the market uses the RemCo chair as the protest outlet, looks increasingly outdated in that context.
The right test is not whether a remuneration policy is comfortable. Many good governance decisions are not comfortable. The right test is whether the policy is coherent, well explained, responsive to feedback, appropriately risky, genuinely performance-linked and aligned with the company’s real strategic and talent context.
Where a committee fails that test, investors should be robust. They should vote against the policy, against the report and, where justified, against the chair. But where a committee has done the work and the disagreement is really about where to draw the line on quantum in a global market, voting against the chair is often the wrong tool.
Executive pay needs scrutiny. It does not need lazy symbolism. If the governance community wants better outcomes, it should stop reflexively spanking the RemCo chair and start using sharper instruments.
Pearson plc, “Directors’ Remuneration Report 2025.”
Pearson plc, “Directors’ Remuneration Policy 2026.”
Pearson plc, “Governance report 2025.”
Farient, “What Happens When Proxy Advisors Say No To Executive Compensation?”
Quoted Companies Alliance, “Publish and be Damned: The Problems with Proxy Advisers.”
Sam Allen Associates, “In Focus: Chairing a Remuneration Committee.”
Research article, “Gender diversity and say-on-pay: Evidence from UK remuneration committees.”
Odgers, “What Makes an Effective Remuneration Committee Chair?”
Pearson plc, “Schedule of Matters Reserved for the Board 2026.”
QCA Annual Review 2024/2025.
Pearson 2026 AGM response letter to proxy advisor voting recommendations.
TEA Letter to Pearson AGM, 1 May 2024.
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