Wall Street firms 'set to face investor revolt over pay'

Wall Street organisations are likely to see significant investor unrest over pay practices during upcoming shareholder meetings.

A report from the Wall Street Journal has suggested that a combination of poor business performance and high-profile protests over executive pay is set to cause issues for US financial institutions during the 2012 proxy season.

Consultants have predicted that executive pay levels are likely to be slashed by 30 per cent from 2010 levels, with bonus payments falling and clawback clauses becoming more prevalent.

Moreover, the introduction of new legislation via the Dodd-Frank Act has provided investors with more power to take action over executive pay, which they are likely to exercise in the coming months.

Paul Hodgson, a compensation expert at corporate research firm GovernanceMetrics International, told the publication: "Shareholders are always a little happier when they see their stocks rise."

This comes after research from Johnson Associates in November 2011 showed a fall in bonus payments for bank staff in the third quarter of last year.