Share

Guide outlines how charities can act to prevent 'outrageous' FTSE executive pay packages

Guide outlines how charities can act to prevent 'outrageous' FTSE executive pay packages
News

Guide outlines how charities can act to prevent 'outrageous' FTSE executive pay packages

Finance | Niki May Young | 17 Apr 2012

Trustees should keep a 'beady-eye' on the voting principles of the asset managers employed to handle their investments in order to help prevent 'outrageous' remuneration packages for directors at the companies charities invest in, according to campaigning group FairPensions.

The lobby group, itself a registered charity, has produced a guide of questions to ask asset managers as FTSE companies enter their busy AGM period from April to July.

The briefing aims to encourage closer attention by asset managers to practices such as 'golden handshakes', transaction-related bonuses, and variable pay which has the potential to be over 200 per cent of the base salary, ahead of casting their votes.

“Every company that is UK-listed has to put to a vote of its shareholders its proposals for remuneration of executive directors of a company," explains Catherine Howarth, chief executive of FairPensions. "The shareholders can either vote in approval or they can vote down the proposals made by the company.

"We want to encourage trustees of charities that have investments to make sure the fund manager, whom they delegate the voting responsibility that comes with the shares, to use the report. We want to alert trustees to the fact that a lot of fund managers do vote in support, virtually automatically of the remuneration proposals put up by the company. And sometimes that’s not appropriate.”

The Executive Remuneration 2012 Briefing for Charity Trustees document quotes statistics produced by Op Cit 1 and Manifest and MM&K stating that in 2010, 9 per cent of remuneration reports recorded a vote against of 20 per cent or more, less than 4 per cent recorded a vote against of 30 per cent or more.

Howarth advises that there is an array of reasons why asset managers so readily approve pay packages, but a key reason is that they often feel pressured to approve the pay packages due to open disclosure and seek "an easy life" in doing so. Yet while that is the case, she said it is important that voting is transparent:

“Voting disclosure is something that the managers decide whether or not to do. Obviously if you’re a charity which invests through a particular fund manager, you have the right to know how the votes are cast on your behalf, but they’re not always publicly disclosed. We’re very much pushing for public disclosure," she said.

Why is FTSE executive pay important to my charity?

Howarth said that the importance of this issue spreads into both financial and ethical concerns of a charity. 

“Often remuneration proposals are pretty outrageous and they’ve given rewards to directors that are completely out of proportion to the actual investment returns that the real share-owners ie the charities are getting.

"I know that for some charity investors it goes beyond just a question of ‘I’m concerned that this could be bad value for me as an investor' but some of them feel that these executive pay proposals are exacerbating inequality in society generally with long-time social detriment. So as part of their charitable mission they might see this as a topic of extra interest," she said.

The full briefing can be accessed by clicking here 

 

 

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Legacy income rises 9.8 per cent, finds benchmark survey

2 Mar 2015

Like-for-like legacy income among large charities is up 9.8 per cent in the year to December 2014, according...

Diabetes UK raises £18.6m through Tesco partnership

27 Feb 2015

Tesco employees, suppliers and customers raised over £18m for Diabetes UK between March 2013 and December...

Coffee mornings top list of most popular fundraising events, report shows

26 Feb 2015

Coffee mornings are the most popular ways for supporters to raise money for charity, according to new...

Political parties and charity bodies condemn Eric Pickles' 'sock puppet' comments

4 Mar 2015

Labour and Liberal Democrat MPs yesterday denounced Eric Pickles’ assertion that charities would be...

Data is often pointless, dangerous and counterproductive says DSC chief

4 Mar 2015

Charities often spend too much time collecting and measuring data and should rely more on their personal...

Lynne Berry appointed to chair new breast cancer organisation

4 Mar 2015

The new breast cancer charity formed from the merger of Breakthrough Breast Cancer and Breast Cancer Campaign...

Daniel Phelan dies, aged 58

13 Feb 2015

Daniel Phelan, owner and editor-in-chief of Civil Society Media, passed away on Wednesday following a...

LinkedIn launches matching service to bring charity volunteering opportunities to 250,000 members

6 Feb 2015

Charities in the UK will be able to advertise volunteer opportunities to 250,000 LinkedIn members who...

Free guide to Bitcoin donations produced for charities

5 Feb 2015

Two Bitcoin organisations have launched a website and free guide to promote the use of the digital currency...

Join the discussion

 Twitter button

@CSFinance