Legal and General Investment Management, the UK’s largest asset management company, will stop almost all direct feedback to companies regarding executive compensation after discovering that their answers are almost always ignored.
The £ 1.33 trillion asset manager outlined the change in approach in an annual letter to the Chairman of the Compensation Committee. This is in the process of sending to all of the 600 or so companies in the FTSE All-Share Index.
In an interview, Angeli Benham, Senior Global ESG Manager at LGIM, said, “Most companies do not act on the compensation feedback we provide.” “For example, they wrote to us that they intend to increase the CEO’s bonus from 150% to 200% of salary. There is feedback that LGIM can’t support it, but it does. increase.”
She added: Companies tend to do the right thing for management rather than listen to our shareholders. “
For the past decade, LGIM has responded to companies consulting asset managers regarding proposed changes in executive compensation. However, for about 80% of the proposed changes, “the answer is already covered by a detailed and directional policy document,” Benham said.
Going forward, LGIM will direct compensation consultations to its policy document and will only address what is considered exceptional, such as when it relates to the application of discretion, or when the policy is abnormal or not stated in the policy document.
“Nevertheless, we believe it is important to provide feedback to companies regarding changes in executive compensation .. Our time has been spent educating markets in areas such as income inequality and climate change. It’s better, “Benham said.
LGIM voted against 37.5% of Britain’s new wage policy in 2020, earlier this year Even tougher lines In the wake of the pandemic, it will be charged in 2021. In particular, it aimed to prevent companies with layoffs or reduced dividends from paying bonuses.
Earlier this year, we voted against payment and bonus schemes at magazine publishers Cineworld, Hollywood Bowl, and Future. The 2021 voter vote of the asset management company has not yet been released.
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The letter to the Chairman of the Compensation Committee also encouraged companies to offer free stock to all employees, motivate them and allow them to share the success of their employers.
Schroeder, a £ 717 billion asset management company, has launched an initiative to provide 5% of salary in equity to all approximately 5,500 employees.
Peter Harrison, CEO of Schroeder, told the Financial Times: He said the move was “very popular” within the company.
LGIM, on the other hand, requires all companies to pay their employees the actual living wages. That’s £ 9.50 per hour nationwide and £ 10.75 in London.
Karoline Herms, Senior Global ESG Manager at LGIM, said: “Many working employees have a hard time achieving their goals because they have to make ends meet between putting food on the table and warming the house. This is to their health and productivity. It may have long-term implications. “
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