Trade body the Investment Association will look to shine a light on companies where pensions to executives are outstripping the majority of the workforce ahead of a number of key annual general meetings.
Companies who pay disproportionate pensions to newly-appointed directors will be “red-topped” in the IA’s Institutional Voting Information Service, the group has said, in an update to the research bank on corporate governance investors can use to inform their voting decisions.
Red-topped companies are those where shareholders should have the most pressing issues with firms, since it is the highest warning level the service issues.
The service is also expanding to red-top companies that fail on diversity by having no or only one women on their board, and will give the next highest warning level, an “amber-top”, to those without a clear path to get a third of women on their board by 2020.
A general highlight will be made on any company with less that 25 per cent female representation.
IA director of stewardship and corporate governance Andrew Ninian says: “The IA’s remuneration principles set out shareholder expectations on executive pension contributions and our members have been clear this is an issue of fairness and pension contributions should be aligned with the majority of the workforce.
“The new IVIS approach reflects our members’ view that newly appointed directors should receive a pension contribution equal to that of the majority of the workforce. IVIS will highlight those companies that pay higher pension contributions to newly appointed directors.
“Similarly, the Hampton-Alexander review has set the roadmap to deliver greater diversity in the boardroom, but a frustratingly high number of companies are still failing to follow it. Our strengthened IVIS approach reflects the fact investors want to see companies do more than take a tokenistic step of appointing a single woman to their board and consider that job done.
“Evidence clearly shows that more diverse boardrooms make better decisions. Investors want to see greater diversity in the companies they invest in to ensure our savers and investors are getting the best returns possible.”