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Church of England: we'll vote to block excessive boardroom pay deals

Jill Treanor

The Guardian

Tuesday 7 February 2017 17.31 GMT
Last modified on Tuesday 7 February 2017 22.00 GMT

The Church of England, a major institutional investor, has put UK
company bosses on notice that exorbitant pay deals will not be
tolerated.

The Church Investors Group, which unites the Church of England and 58
related charities and organisations managing a combined £17bn, has
written to the 350 biggest companies on the stock market to set out
how it intends to vote at this year’s annual general meeting season.

It is joining the chorus of voices expressing concern about executive
pay in a year in which large numbers of companies are putting their
bonus deals to a binding vote – rather than an advisory one – at their AGMs.
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“We voted against two-thirds of remuneration reports that were
proposed last year,” said Adam Matthews, head of engagement for the
Church Commissioners – an investment fund manager that is a member of
the Church Investors Group – and Church of England Pensions Board.

“We’re saying that when we see pay policies that aren’t justified we
will vote against them. We want to see greater use of discretion by remuneration committees.”

The Church Commissioners manage £7bn of the Church of England’s
investments, and help funds dioceses and parishes.

Major institutional investors such as BlackRock – the world’s biggest
fund manager – and Standard Life have also warned companies that they
are on alert for excessive pay deals for company executives. Investors
have already scored a victory this year when Imperial Brands, maker of Gauloises and John Player cigarettes, scrapped a pay rise for its
chief executive Alison Cooper.

Matthews said this year’s AGM season was important because of the
number of binding votes on pay policies, which must be put forward for shareholders’ approval every three years. It has been estimated that
about two-thirds of companies in the FTSE 100 have to put their pay
policies to a vote this year. Annual pay deals are voted on separately
each year, but this is only advisory.

He said there was “collective concern” among investors about pay deals
this year, which are being put to a vote at a time when the government
is consulting on changes to the way the executive remuneration system
operates. The green paper – open for discussion for three months – was launched after Theresa May pledged to reform big business during her
campaign to become Conservative leader.

It asked if companies should publish their pay ratio – the gap between
the chief executive and the wider workforce. In 2015 chief executives
received 128 times the average pay of their staff, it said.

The letter to FTSE 350 companies, signed by James Corah, secretary to
the Church Investors Group, urges companies to provide information on
pay ratios. It also warned that it intends to focus on climate change,
water use and the way companies treat their employees.

Edward Carter, a canon who chairs the Church Investors Group, said:
“Our members are committed to playing an active and productive role in advocating for improved governance at this important time of reform.”

The Church Commissioners’ largest stakes are in banking groups such as
Lloyds and HSBC, supermarket group Tesco and pharmaceutical company AstraZeneca.

Matthews also warns that the investment group keeps a close interest
in climate change. In the past the Church has challenged BP and Shell
to take responsibility for their carbon footprints and limit their
contribution to global warming by submitting shareholder resolution
calling on the energy companies “to adapt their businesses over the
long term for a low carbon economy”.

https://t.co/1bc7Jl1XDl

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http://khanya.wordpress.com

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