Shareholder group targets pension perks and diversity ahead of AGM season

Britain’s biggest companies are facing investor backlash over diversity and pension perks as AGM season approaches.

The Investment Association (IA), the trade body representing investment managers in the UK, has issued a warning shot as it targets companies which are lagging behind on corporate governance priorities.

In research provided to shareholders, the IA will issue a ‘red-top’ warning – the highest and most serious level – on firms which pay newly-appointed directors at rates above the majority of the workforce.

Andrew Ninian, director of stewardship and corporate governance at the IA said the new policy reflected the views of members.

“The IA’s Remuneration Principles set out shareholder expectations on executive pension contributions and our members have been clear this is an issue of fairness, and pension contributions should be aligned with the majority of the workforce.”

The same red-top treatment will be doled out to companies which have no women on their boards or just one female member.

An amber-top will also be attached to firms which are not on track to reach 33% female boards by 2020, a goal set by the Hampton-Alexander review into women on boards.

As of October 2018, 26.7% of board positions at FTSE 350 companies were held by women.

Mr Ninian said it was not enough for boards to appoint a single woman.

“Evidence clearly shows that more diverse boardrooms make better decisions. Investors want to see greater diversity in the companies they invest in to ensure our savers and investors are getting the best returns possible.”