UK "Shareholder Spring" Shines a Spotlight on Governance Weaknesses

The 2012 UK annual general meeting season has set a new record for shareholder rejections of remuneration reports. The six negative shareholder votes – the latest, a resounding 60% rebuff to Sir Martin Sorell and WPP PLC—now surpass the previous record of five rejections, which occurred in the darkest hours of the Great Recession in 2009.

Some commentators have termed this phenomenon the UK's "shareholder spring", characterising these somewhat surprising votes as "warning shots" fired by "fed up investors" in an "escalating shareholder revolt". But is there really an effective shareholder revolt in full swing, or does the so-called "shareholder spring" merely highlight the weaknesses in corporate governance with respect to managing executive remuneration?

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