Pension funds warn company bosses over executive pay deals

The National Association of Pension Funds (NAPF) has acted to try and curb executive pay deals in the upcoming voting season by announcing details of the guidelines they expect to see applied in 2013.

The NAPF did this by sending a letter to the Charimen of the UKs largest 350 businesses (FTSE350) warning that remuneration which did not reflect performance may be met with a repeat of last year’s shareholder spring.

In the guidelines issued to companies the NAPF has asked that Board level pay and exec deals should  be in-line with inflation and should more closely track payments made to the workforce.

NAPF was especially critical of the practise of peer group ranking on pay where companies seek to match the deals handed out by other similar sized firms, creating a herd mentality on executive pay.

Joanne Segars, Chief Executive, NAPF, said:

“Shareholders were very vocal last year, and those companies that have failed to take a robust stance on boardroom pay should expect similar opposition this spring. Too many companies have allowed the link between pay and long-term business performance to weaken in recent years.

The NAPF working with some of its larger members recently published a discussion paper on this issue:

http://www.napf.co.uk/PolicyandResearch/DocumentLibrary/0290_0290-Hermes-EOS-and-NAPF-Pay-Principles.aspx

John Ditchfield, writing in a personal capacity.