Commenting on Prime Minister David Cameron’s pledge today to empower shareholders to tackle excessive boardroom pay, David Paterson, Head of Corporate Governance, National Association of Pension Funds (NAPF), said:
“Pension funds have long urged restraint in setting directors' pay, and a flatlining economy has made this issue even more pressing. The Government’s commitment to try and get a grip on spiralling pay is welcome.
“Boardroom pay needs to be brought under control and held up to the light. Too often we find pay structures are opaque and complicated, making it difficult for shareholders to test them. We need a much clearer explanation of the links between pay and performance. Failure should never be rewarded.
“The Government’s thinking around a binding vote is interesting but we need more detail on how it would work before we could give it our support. Shareholders already have a non-binding vote on pay policy, and it is very rare for a board to lose that vote. Greater transparency on performance goals and tougher standards in setting them would be more effective in controlling boardroom pay.
“As we enter a new bonus round, shareholders need to take a tough stance in their voting on pay, and in opposing the re-election of directors who sanction inappropriate reward policies.”
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]