26 April 2013 #Employment
FTSE 350 companies risk a backlash from one of the country’s biggest pension fund investors if executive pay is not curbed. The Local Authority Pension Fund Forum, which represents pension funds with more than £115bn in assets, has published guidelines on its expectations for executive pay, arriving at the following conclusion
More pay does not necessarily equal better performance. The significant growth in performance-based pay at UK companies has not driven significant improvements in financial returns to shareholders, nor has it improved overall long-term shareholder value.
The Forum highlighted concerns over steady increases in executive pay in recent years despite flat or negative company performance, and the growing gap between those at the top and everyone else, which can undermine morale in the workforce.
The Forum’s guidelines are intended to provide practical ways to encourage executive remuneration consistent with long-term, sustainable returns and shareholder value.
The guidelines encourage remuneration committees at FTSE 350 companies to comply with the following recommendations:
Pay and bonuses:
Consultation with shareholders and staff:
Carillion Advice Services