The National Association of Pension Funds (NAPF) commented on plans for a binding vote on executive pay announced today by Business Secretary Vince Cable.
David Paterson, NAPF Head of Corporate Governance, said:
“Shareholders have become increasingly concerned about boardroom pay being ratcheted up in a cloud of complexity. A binding vote could help put the brakes on.
“This is an opportunity for everyone to rethink pay policies and to aim for restraint, simplicity and transparency. The goal must be to better link pay and performance, so that it can be explained and justified.
“A single figure which shows what top executives took home will help shareholders hold boardroom pay up to the light. Part of the problem is that deals have become increasingly complex. A headline number will focus minds and allow for clearer comparisons to be made between companies.
“We are pleased that companies will have to inform shareholders about exit payments, or ‘golden goodbyes’, at an earlier stage. These can yield substantial pay-offs in cash, shares and pension rights. Through the binding vote investors will now get the greater say they have been looking for.
“The reforms should help bring about much-needed cultural change. They present a challenge to companies and investors as there will be a need for better communication by both.”
Notes to editors:
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]