The Pensions and Lifetime Savings Association (PLSA) has published an updated edition of its Corporate Governance Policy and Voting Guidelines [PDF], ‘calling on investors to take a tougher stance on those who set executive pay policy’. The new guidelines recommend that if shareholders vote against a company’s remuneration policy, they should also oppose the re-election of the remuneration committee chair as a company director.
The guidelines aim to:
Recent PLSA research revealed that 85% of pension funds were concerned by the pay gap between executives and ordinary workers. The research also noted that while there were significant votes against pay practices at a number of FTSE 350 companies, there was little opposition to the re-election of the remuneration committee chairs.
The new guidelines also call for companies to explain what steps they are taking to enhance diversity in boardrooms and suggest that annual reports should include better information about a company’s corporate culture and employment practices.
Luke Hildyard, Policy Lead: Stewardship and Corporate Governance, Pensions and Lifetime Savings Association, said:
‘Provocative levels of executive pay are doing great damage to the reputation of British business. The failure of some companies to recognise stakeholder concerns on this issue is a major worry for pension funds as investors. Our new guidelines are designed to ensure the individuals responsible for a company’s executive pay practices are held to account. We hope that this can at last deliver meaningful progress on excessive top pay.’