DIRECTORS at Britain’s largest banks have been warned against tarnishing their reputations by developing schemes to exempt top earners from higher income tax.
The Association of British Insurers, whose members own nearly a fifth of the stockmarket, said it “would not be able to approve” salary structures that focused on avoiding the forthcoming 50 per cent tax band instead of encouraging long-term strategy.
The ABI has written to the remuneration committees of FTSE350 companies urging them to review the way they reward staff. Shareholders do not want to see bonuses paid out when performance has been exceptionally poor, the ABI said, or to see executives handed windfall gains if share option multiples are maintained after a company’s shares tank.
The warning follows growing concerns that a culture of risk-taking and excessive remuneration is already returning to the City. Firms are thought to be restructuring salaries over £150,000 as
capital gains ahead of the new tax rate in April.
Peter Montagnon, director for investment at the ABI said: “We do not expect shareholders to pay to reduce employees’ tax burdens.”