Investors fight back over bonuses at furlough firms
Companies taking furlough cash should not pay bonuses to their directors, the City’s top investment managers have warned.
The Investment Association (IA), which represents 250 fund managers overseeing £8.5 trillion of investments, has said remuneration committees should not compensate bosses for pay cuts by “catch up” awards or disproportionate salary increases.
Investors have also warned that any bonuses paid to directors that came from either direct government funding or emergency cash injections from shareholders must be supported by a “clear rationale”.
The IA has already warned companies to treat their executives in line with the rest of the workforce amid the pandemic. Previous guidance said firms should ensure director pay takes into account the suspension or cancellation of dividend payouts.
The industry body’s IVIS (Institutional Voting Information Service) will for the first time issue a “red top” – the strongest warning for investors – against companies that offer directors pension contributions of more than 15 per cent of their salary.
Companies are also facing further scrutiny on board diversity and will issue strong warnings against firms where women make up less than 30 per cent of the board. The Hampton Alexander Review published today reveals it has achieved its target of 33 per cent of board positions to be held by women as the number doubled over the past year.
The IA will also for the first time issue an “amber-top” to any FTSE 350 company which does not disclose the ethnic diversity of its board.
“Those who fail to do so this year will find themselves increasingly under investors’ spotlight,” Andrew Ninian, the IA’s director for stewardship and corporate governance warned.