Executives' pensions cut at 30 FTSE 100 companies

19
Sep

At the end of last month, data analysis of the 2019 AGM season by the Investment Association (IA) confirmed that their guidance had borne fruit, and 30 of the FTSE 100 companies had made “significant changes” to how they contribute towards the pensions of their Executive Directors. 

This follows the IA's February recommendation that FTSE 100 companies should contribute to the pensions of their Executive Directors in line with the majority of their workforce. 

 

Over the past year shareholder pressure has led to companies such as Aviva, HSBC, Royal Bank of Scotland and BT to make the following changes:

  • 4 companies have reduced pension contributions for all incumbent Directors with immediate effect.
  • 3 companies have recently appointed new Directors with pension contributions in line with the majority of the workforce.
  • 17 companies have pledged that any new and incoming Directors in the future will be given pension contributions in line with the majority of the workforce.
  • 6 companies have made other changes, including the reduction of pension contributions for both existing and future Directors. 

 

On a related issue, the IA which represents savers, investors and businesses managing £7.7trn of assets, also contacted 69 companies in February, as they had one or no women on their Board. 

Since doing so, the IA has reported that 36% (28) of those companies have since added at least one woman to their Board. 

These positive developments are being attributed to shareholder pressure and the fear of shareholder rebellion.

 

Welcoming the changes, Chief Executive of the IA, Chris Cummings stated, “Shareholders have been very clear they want pension payments for Executives to come down to the same level as the rest of the workforce and for diversity on Boards to improve. 

"We have seen a clear step change in the market on both of those fronts during this year’s AGM season, which is welcomed by shareholders…  …Companies that do not take on board shareholder concerns, risk facing yet more shareholder rebellions next year.”

 

It is apparent companies that do not pay sufficient heed to their shareholders do so at their peril and shareholder rebellions are not to be underestimated. 

As Business Secretary, Andrea Leadsom MP, stated, “There is now more transparency then ever around the UK’s biggest companies and these results show that important issues such as excessive Executive pay and diversity on Boards are starting to be taken seriously.”

 

If you require guidance regarding pension contributions for Executive Directors or your workforce, or have queries in relation to gender diversity or any other aspects of employment or HR law, please contact Jonathan Moreland, jmm@swinburnemaddison.co.uk, or Sharney Randhawa, shr@swinburnemaddison.co.uk, or call us on 0191 3842441.

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