Pensions and Diversity Under the Spotlight in AGM Season

Shareholder rebellions are forcing companies to address inequality in remuneration and lack of gender diversity on boards

Annalisa Esposito 29 August, 2019 | 9:27AM
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Almost a third of FTSE 100 companies have pledged to reduce the pension disparity between senior executives and the rest of the workforce, according to investment trade body the Investment Association. 

Commentators say the pledge is an important step in ending excessive pay, a key issue for ESG investors. 

Since February, some 28 FTSE companies have added at least one female member to their board. It comes after pressure from shareholders and a warning from the IA to so-called "red-top" companies that treat their bosses differently from the rest of the workforce by pouring excessive pay into their pension pots and showing a lack of gender diversity. 

“These results show that important issues of excessive executive pay and diversity on board are starting to be taken seriously,” says Andrea Leadsom, the Secretary of State for Business.

With the latest AGM season over for UK Plc, the IA has looked at how its members voted and the progress made on its campaign to improve equality within companies. Since the launch of its campaign in February, the IA said 30 FTSE firms had made significant changes.

Some 17 have said that any new director will be given pension contributions in line with the majority of the workforce while four have reduced pension contributions for existing directors. A further six companies have made multiple changes, reducing contributions for both existing and future directors. 

Beau O’Sullivan, communications manager for charity organisation ShareAction, says: “Investors clearly recognise the economic risks of inequality and are having productive conversations with boards to trim total remuneration at the top.”

Companies have been told that at least a third of their board must be female by the end of 2020, and 28 of the 69 companies which previously had one or no women on the board have added at least one woman since the IA wrote to them earlier this year. 

“Executive remuneration is a classic and long contested ESG issue, but it is interesting here that the IA has also managed to make waves with diversity on boards,” says Elizabeth Stuart, ESG analyst at Morningstar.

Chris Cummings, chief executive at the IA, said: "Time is running out for those companies yet to make progress. Shareholders will be keeping a close eye on those companies and will not hesitate to hold them to account to ensure they do the right thing. The evidence is irrefutable: boards with greater gender balance outperform their less diverse peers." 

Shareholder Rebellion

With environmental, social and governance (ESG) issues under the spotlight, shareholders are now more aware of their rights and confident in making their voice heard on corporate governance issues. 

Since August 2017, the IA has kept a public register of FTSE All-Share companies tracking shareholder rebellions. It wants to track how or whether companies are responding to shareholders concerns.

The IA said there was a 5% increase in shareholder dissent in 2019 compared with a year ago, with 60 relating to remueration while 86 related to director re-election. Reassuringly, some 86% of companies facing dissent are now acknowledging it and setting out how they will engage with shareholders to address their concerns. That's up from 58% when the register launched in 2017. 

Stuart says: “This highlights the power of collaborative engagement and sustained pressure from shareholders over strategic decisions. Moves such as this and the recent work on the gender pay gap will hopefully continue to improve labour relations in within the UK.”


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Annalisa Esposito  is a data journalist for

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