Wednesday 28 August 2019 12:01 am

Three in 10 FTSE 100 companies cut executive pensions as investor pressure mounts

Three in 10 FTSE 100 companies have pledged to cut their executives’ pension payments in response to pressure from shareholders, as new data reveals that investor rebellions are on the rise.

Research published today by the Investment Association shows that 30 companies on the index have made significant changes to executive pensions during this year’s annual general meeting (AGM) season.

Of these, three companies (RBS, BT, and Aviva) appointed new directors with pension contributions in line with the majority of the workforce. Four others – BP, Intercontinental Hotels, Persimmon, and Centrica – reduced current directors’ pension contributions.

Read more: Ashtead slashes pension entitlements for top execs

Six additional companies made multiple changes, including reducing contributions for both existing and future directors.

17 FTSE companies committed to giving new directors pension contributions in line with the majority of the workforce.

Data published today on IA’s Public Register – which tracks investor rebellions of more than 20 per cent – show that shareholder dissent is on the rise, with a five per cent increase so far this year.

Director reelection and pay were the two biggest points of contention, with 34 per cent of resolutions on re-election appearing on the Register, alongside 24 per cent of resolutions on remuneration.

Pressure has been building on top UK companies to cut the disparity between pensions awarded to executives and average staff members.

Standard Chartered’s chief executive Bill Withers came under fire recently for telling the Financial Times shareholders were “immature” for focusing on his pension arrangements.

“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,” said Chris Cummings, head of the IA, in response to the figures released today.

Read more: MPs turn up the heat on Standard Chartered boss over pension pay row

“Shareholders will continue to focus on bringing executive pensions in line with majority of the workforce over the next 12 months,” Cummings added. “Companies that do not take on board shareholder concerns risk facing yet more shareholder rebellions next year.”

Frank Field, chair of the Work and Pensions Committee said: “Finally, remuneration committees and CEOs themselves are waking up to the reality that a vast gulf between the pensions of top executives and their staff is indefensible. 30 FTSE 100 companies making changes after this year’s AGMs is a welcome – if inevitable – first step, but the spotlight of scrutiny is not going to go away.”

Responding to the IA’s figures, business secretary Andrea Leadsom said: “We are committed to ensuring the UK’s largest companies become even more transparent and accountable, which is why we have implemented reforms to upgrade our corporate governance framework to ensure the UK remains the best place in the world to work, invest and do business.”