ChairmEn of large listed companies in the UK were warned to justify executive pay packets by one of the country’s biggest fund managers, it emerged yesterday.
Aviva’s fund management arm, Aviva Investors, wrote to over 800 firms telling them it expected salaries and bonuses to be “prudent [and] aligned to business strategy and performance over the long term”.
The letter, signed by Anita Skipper, Aviva’s corporate governance director said: “Board pay has always been a particularly high-profile issue and will continue to be so in view of the apparent disconnect there has been between executive pay inflation and the value creation for shareholders.”
Aviva Investors owns about 1.5 per cent of every company quoted on the FTSE All-share index, which is valued at around £25bn.
Skipper added: “This means that we will be looking for explanations and justifications for levels of pay and why the arrangements are appropriate, and the use of deferrals and clawback.”
The move comes amid growing concern over the pay of top executives and after institutional shareholders were criticised by the government for not being influential enough with the firms they own.
The Association of British Insurers admitted that, despite having raised questions with the banks, its members but had not been as effective as they might have been in averting the near-collapse of the UK banking sector.
Meanwhile, non-executive chairmen of FTSE 100 firms, received average pay increases of 6.7 per cent last year, outstripping inflation, according to a survey published by research body Incomes Data Services.
City A.M. Reporter