On the go: Just 30 per cent of FTSE 100 companies have pledged to cut their pension payments for their directors, following a campaign by the Investment Association on excessive boardroom pay.
Analysis published on Wednesday shows that 30 blue-chip companies have made some changes – 17 have committed to giving new directors a pension contribution in line with the majority of their workforce, while four have reduced pension contributions for incumbent directors immediately.
A further three have appointed new directors with a pension contribution in line with the majority of the workforce. Six additional companies have made multiple changes in this annual meeting season – reducing contributions for both existing and future directors.
In February, the IA set out new guidance stating that investors wanted executive directors’ pension contributions to be proportionate to those given to the majority of the workforce, but there is a long way to go.
According to an annual assessment of pay packages by the High Pay Centre last week, FTSE 100 chief executives get an average pension contribution or payment in lieu worth 25 per cent of base salary. By contrast, employees get a contribution worth 8 per cent of their wages.
Commenting on the research, IA CEO Chris Cummings said: “Shareholders have been very clear they want pension payments for executives to come down to the same level as the rest of the workforce and for diversity on boards to improve. We have seen a clear step change on both of those fronts during this year’s AGM season, and this is welcomed by shareholders.”
From April next year, regulations around executive remuneration transparency come into play, with large listed companies having to disclose and explain the gap between CEO pay and that of their average employee.
Explaining the new policy, Andrea Leadsom MP said: “For the first time the UK’s biggest companies will be required to disclose and explain the ratio of their bosses’ pay, and shareholders are already legally required to vote on CEO pay policy. These are both concrete measures to tackle excessive pay and increase accountability in the workplace.”
According to the Chartered Institute of Personnel and Development, the median CEO salary of £3.46m is still more than 117 times that of the average UK full-time worker earning £29,574.
