The Pensions and Lifetime Savings Association publishes monthly topical questions to aid trustees in considering the effectiveness of their managers’ stewardship activity. We encourage funds to ask these questions during their regular manager reviews in an effort to understand their managers’ approaches and activities and to ensure that they are adhering to the stewardship policies.
MAY'S TOPICAL QUESTIONS FOR YOUR MANAGER
Background: Blackrock, the world’s largest asset manager, holds shares in 15,000 companies but has been criticised for voting in favour of 96 per cent of executive remuneration proposals. Some critics in the UK have suggested that high pay in the asset management sector makes investors reluctant to condemn a system from which they themselves benefit at company AGMs. Against this backdrop, a shareholder resolution at Blackrock’s AGM called on the company to exercise its power to address perceived excessive executive pay awards.
Question: Did you support the shareholder resolution at Blackrock’s AGM (if applicable) and how do you ensure that your own organisation’s pay policies don’t affect your judgement when voting on remuneration awards/policies at other AGMs?
Background: The issue of executive remuneration continues to dominate AGM season, with majority votes against reports/policy at BP, Smith and Nephew and Weir Group, as well as sizeable minority votes against at RB, Anglo-American, Centrica and others. Sacha Sadan, the Director of Corporate Governance at Legal and General, has said that CEO pay relative to the average employee will be a ‘hot topic’ of 2016?
Question: Which pay packages have you opposed at AGMs this year, and on what grounds, and do you think that pay ratios between Executives and their workers are relevant to investors?
Read previous questions here.