CHURCH investors have increased pressure on companies to tackle excessive executive pay, which they say has been rising disproportionately.
A letter from pension-fund investors and asset managers, published in The Daily Telegraph on Monday, expresses concern “that rewards to executives have been rising disproportionately relative to shareholders and to companies’ perceived benefit to society”.
The letter’s signatories include the chief executive of the Church of England Pensions Board, Bernadette Kenny; the chairman of the Church Investors Group (CIG), Richard Nunn; and the chief executive of CCLA Investment Management, Michael Quicke.
The issue of executive remuneration was highlighted earlier this year when the chief executive of the Royal Bank of Scotland, Stephen Hester, decided to waive a bonus valued at just under £1 million after intense public pressure.
The letter calls on companies to pay executives in line with a number of principles. These include telling shareholders “the achievements expected and rewards available”; pay packages rewarding the creation of “enduring value”; and the “clawback of executives’ remuneration from previous years if value proves illusory”.
On Thursday of last week, a group of investors, including the First Church Estates Commissioner, Andreas Whittam Smith, wrote to The Daily Telegraph urging investors “to take close interest in how their investment managers are acting on their behalf on the issue of excessive remuneration”, as the season of shareholder AGMs approaches.
“The problem of excessive executive pay has become so serious that we have resolved to work with our investment managers to ensure that the remuneration policies of the companies we invest in are aligned with our interests, transparent, linked to performance, and appropriate in the context of each company.”
In a statement issued by Church House on Monday, Mr Whittam Smith said: “Until now, charities’ contributions to the public debate about the issue of executive remuneration have been fairly muted. However, with the AGM season upon us, the Church Commissioners and a substantial coalition of other charities wish to put their concerns on the record. They feel that this is the right time for charities to make their feelings on the issue known in accordance with their charitable missions.”
The chairman of the CIG, Richard Nunn, who also signed the letter published in the Telegraph last week, said that the signatories wanted “to raise awareness of the rights attached to share ownership”.