Boardroom (4)

Greater scrutiny of the gap between the pay of company CEOs and their staff could be the "hot topic" in 2016, according to one of the UK's largest fund management firms.

Legal & General Investment Manager (LGIM) said the growing gap between wages on the shop and office floors and large boardroom pay packages are becoming uneasy among many investors.

With the US Securities and Exchange Commission (SEC) set to introduce new rules on reporting pay gaps next year, Sacha Sadan, director of corporate governance at LGIM said "this is going to put a lot more pressure on companies everywhere.

He added: "This is becoming a political and social issue and will creep into the governance world. Frankly we don't know what the ratio should be, but I think it is going to be an emerging issue and more transparency will occur in this area."

The report comes as AGM season gets underway. There has already been some backlash against higher pay for CEOs among shareholders in the City. Earlier this month, nearly 60% of BP shareholders voted against plans to give chief executive Bob Dudley a 20% pay rise, despite falling profits and thousands of job cuts.

A majority of Smith & Nephew shareholders also voted against a new pay package for the company's CEO. And 40% of Anglo American shareholders voted against a new deal.

LGIM's report, which focuses on AGMs from 2015, said 93 of the 188 resolutions rejected by shareholders last year were on pay.

Mr Sadan said: "Despite remuneration still being a key concern, I believe that corporate governance has evolved from just voting on pay related issues. Our report shows the issue on which we engage with companies ranges widely from climate change to cyber-security and continues to evolve."

The report also the issue of boardroom diversity, focusing particularly on female board members. In 2013, Legal & General warned firms its holds a stake in that it would vote against the chairman if they had all-male boards.

Despite the overall target of 25% of seats in FTSE 100 boardrooms being filled by women, set by Lord Davies, the report shows that 42% of firms are yet to reach the target.