Investment Association Pressures FTSE 350 Bosses To Disclose Pay Ratios

Investment Association Pressures FTSE 350 Bosses To Disclose Pay Ratios

Britain's largest listed firms have been told to justify ballooning executive pay and disclose the pay ratios of median employees by a big-hitting investment group.

The Investment Association (IA), whose members collectively manage over £5.7 trillion worth of assets, has written an open letter calling on FTSE 350 firms to meet new industry expectations for executive remuneration.

It said that any executive pay increases - whether related to salary or benefits packages - should be "justified with clear and explicit rationale," and that bonus targets must be disclosed to make sure there is an "appropriate link" between performance and pay.

The organisation is also calling on Britain's largest firms to reveal the pay ratios of CEOs versus median employees, as well as other executive members.

The letter said: "The level of remuneration awarded to executive directors continues to be an area of particular concern for members, as well as society as a whole, with the current economic and political climate also contributing to the level of scrutiny.

"Members continue to pay close attention to levels of remuneration, and it is essential that companies adequately justify the level of remuneration awarded to executives".

The IA's letter draws on a report published in July by the Executive Remuneration Working Group, which was established by the IA in 2015 to independently review remuneration structures and their effect on company performance.

It follows a round of shareholder revolts at annual general meetings (AGM) this year, as scores of investors took umbrage with the remuneration awards rolled out to top bosses.

Blue-chip giants, including Anglo American and BP, have come up against shareholder revolts.

In April, investors voted to reject BP's remuneration report for the last year, which included a pay deal of 19.6 million dollars (£13.8 million) for chief executive Bob Dudley.

The IA said that investment managers are facing client pressure to justify their own support - or rejection - for corporate remuneration packages.

"Companies must be sensitive to the prevailing mood regarding executive remuneration, and take into account the effect of executive pay levels on all stakeholders", the IA's letter said.

Overpaid bosses have also come under fire from the Government.

Prime Minister Theresa May issued a warning to greedy firms during a speech at the Conservative Party conference in Birmingham last month.

Ms May said: "If you're a boss who earns a fortune but doesn't look after your staff, an international company that treats tax laws as an optional extra ... a director who takes out massive dividends while knowing that the company pension is about to go bust, I'm putting you on warning. This can't go on any more."

Close

What's Hot