A report released last week showed that shareholders in Europe are increasingly contesting pay reports for executives, as investors who are dissatisfied the actions of companies on issues of environmental and social issues are making their dissatisfaction known through votes against the remuneration of directors.

According to an annual review by shareholder engagement firm Georgeson, across seven countries, during the 2023 annual general meeting season, the percentage of executive pay reports disputed by investors rose to 42.9%, marking the highest reading in five years.

According to Daniele Vitale, Georgeson’s head of governance UK & Europe, the limited number of environmental and social governance resolutions indicated that stockholders were using the remuneration reports as a means of registering displeasure with the actions of company leadership. According to Georgeson, if at least 10% of a vote is in opposition, that vote is registered as contested.

Vitale said to Reuters, “There is also a perception that some companies have used ESG metrics in pay to make it easier for executives to meet payouts.”

Switzerland saw the highest share of contested resolutions on executive pay reports, with 68.4% of reports being contested.

On the other end of the spectrum, the UK had the fewest, with 20.2%, however it has seen its percentage rising of late, and rose from 16.2% in 2021, according to Georgeson.

Domenic Brancati, Georgeson’s global chief operating officer noted that as big asset managers like Blackrock and State Street take up so-called devolved proxy voting rights to limit the power of investors who could vote differently from institutional shareholders, opposition to executive pay would appear likely to increase.

Meanwhile, according to Georgeson the percentage of disputed resolutions on remuneration policy fell from 34.8% in 2022 to 29.2%.

The difference between resolutions on remuneration reporting and remuneration policy is that the former is typically advisory rather than binding. Pay reporting votes also tend to be held annually.

The review showed that the percentage of contested director election resolutions was up as well, coming in at 11.7%, compared to 11.2% in 2022.

Georgeson noted the the number of “Say on Climate” resolutions, which would give shareholders a say on the climate strategies of companies, fell from 36 last year to 24, but was up from 12 in 2021.