The Pensions and Lifetime Savings Association called on investors to take a tougher stance on policymakers responsible for executive pay decisions, in its newly published guidelines.
In its recent edition of corporate governance policy and voting guidelines, the U.K. association pointed out the significance of holding management and boards accountable to shareholders or pension funds.
“(These) efforts are directed toward maximizing the long-term returns of pension schemes’ assets, irrespective of the potential for short-term discomfort,” the guidelines read.
The new code of practice recommends that if shareholders vote against a company’s remuneration policy, they should also oppose the re-election of the remuneration committee chair as a company director.
“(The guidelines) are designed to ensure the individuals responsible for a company’s executive pay practices are held to account and we hope that this can at last deliver meaningful progress on excessive top pay,” said Luke Hildyard, policy lead for stewardship and corporate governance at PLSA, in a news release.
PLSA’s research recently revealed that 85% of pension funds were concerned by the pay gap between executives and ordinary workers. The research found that while there were significant votes against pay practices at a number of FTSE 350 companies, there was little opposition to the re-election of the remuneration committee chairs.