By David Ricketts
Of Financial News
Aviva Investors, one of the U.K.'s largest investors, says some companies "have failed to back up their words with action" in the wake of the Covid pandemic, and has warned it will vote against boards that have rewarded undeserving bosses with excessive pay and bonuses.
The 355 billion pound ($490.79 billion) asset manager opposed 43% of pay packages globally last year and has vowed to adopt an equally tough stance at this year's round of annual shareholder meetings.
"The pandemic has exposed deep societal fault-lines, most notably social exclusion and inequality, and has served as a barometer of how far firms are willing to go to meet their stated commitments to stakeholders," said Mirza Baig, global head of ESG corporate research and stewardship at Aviva Investors.
"At this historic moment, some companies have delivered on their promises, but many have failed to back up their words with action. As we approach AGM season, Aviva Investors will use its votes to oppose executive pay packages that are disconnected from the experience of shareholders and wider stakeholders."
Where Aviva Investors has significant concerns, Mr. Baig warned it would likely "hold individual directors accountable and withhold our support for their re-election to the board."
The U.K. asset manager is the latest large investor to signal a willingness to tackle excessive executive remuneration during the upcoming AGM season--regarded by many as the first test of how companies have reacted to the Covid crisis.
U.S. asset managers BlackRock Inc., Vanguard Group Inc. and Neuberger Berman Group LLC recently told Financial News they would be keeping a close watch on pay and bonuses in the wake of the pandemic, promising the use their voting power where necessary.
Legal & General Investment Management, the U.K.'s largest fund manager which last year voted against the adoption of 37.5% of new remuneration policies at British companies, is also willing to hold boards to account over pay and bonuses.
"If you've taken taxpayer money, you've sacked people and you've cut your dividend, you'll want a good reason to be paying bonuses to executives this year," Sacha Sadan, director of investment stewardship at LGIM recently told FN.
According to Aviva Investors' responsible investment annual review, last year it voted against the remuneration report at U.K. food producer Cranswick PLC, which proposed a total pay package of GBP2.9 million for Group Chief Executive Adam Couch.
Aviva Investors said that the CEO's pay versus the median employee pay for the year increased significantly to 101 to 1 up from 79 to 1 during the previous year. It added that the results of favorable financial performance weren't being distributed with the wider workforce, particularly during the crisis.
Cranswick revealed in its annual report last year that three of its factory workers had died after contracting Covid.
(END) Dow Jones Newswires