Long "shareholder spring" seen harming UK firms

LONDON, June 19 (Reuters) - A prolonged "shareholder spring" of confrontation between investors and executives would harm British firms, the head of one of Britain's biggest investor groups said on Tuesday.

Investor challenges to executive pay rises and management performance have gained momentum globally, particularly at a time of falling share prices. Shareholders have welcomed their greater influence at annual company meetings.

But the head of the Investment Management Association, whose members manage over 3.9 trillion pounds ($6.1 trillion) in assets, said it would be bad to have such battles every year.

"Let's not forget these companies are major contributors to the British economy, major employers. We want them to be well run, not continuously mired in controversy with shareholders," Richard Saunders told British lawmakers.

"It's a little bit of a wake-up call to boards... They will reach out more, there will be more dialogue so we will probably see less cases in the coming years."

He was speaking to a panel investigating how to improve corporate governance and whose findings will shape the work of new regulatory bodies being set up next year.

High-profile victims of the shareholder spring include Andrew Moss, who quit as head of insurer Aviva after investors rejected his pay plans. Last week, shareholders rejected the pay rise proposed by Martin Sorrell, head of the world's largest advertising agency, WPP.

The director general of the Association of British Insurers (ABI), whose members own about a fifth of Britain's publicly traded shares, told the panel that the shareholder challenges were about more factors than just pay.

"What we hope and believe is emerging from this is an approach of engagement that will address those issues so there is consultation," Otto Thoresen said.

Banks bailed out by taxpayers in the global financial crisis have been under particular pressure from regulators to restrain bonus payouts. Europe's top regulatory official Michel Barnier has proposed a pan-EU law that would give investors legal clout to curb bosses' pay and set caps on executive bonuses. ($1 = 0.6382 British pounds) (Editing by Sinead Cruise and Matthew Tostevin)