shareholders | Pension360

UK Pension Group Accuses Barclays of “Misleading Shareholders” Over Executive Pay [UPDATE: Barclays Pay Chief Resigns]

UPDATE: On Tuesday, Barclays announced the resignation of Sir John Sunderland, chair of the bank’s pay review committee.

Barclays says the resignation was unrelated to pressure from the LAPFF, who publicly called for Sunderland’s resignation on Monday.

The bank has been criticized by the LAPFF and others over high bonuses and compensation.

Read the original Pension360 story, published on Monday, below.

_______

The UK’s Local Authority Pension Fund Forum (LAPFF), a group of 62 public sector pension funds, is taking Barclays to task for failing to replace the chairman of the bank’s pay review committee.

LAPFF, a group that has previously expressed outrage over bank’s “grossly excessive bonuses”, is now saying that the bank promised to replace the chairman of its pay review committee.

But 11 months after the promise, no change has been made.

More from BBC:

A leading pension body has called for the immediate resignation of Sir John Sunderland, chair of Barclays’ pay review committee.

It accuses the bank of “misleading shareholders” for saying before the 2014 annual general meeting (AGM) that Sir John would step down from the role to give way to Crawford Gillies.

Sir John is still in the post 11 months later, the LAPFF says.

Barclays declined to comment on the resignation call.

Barclays was widely criticised by shareholders for its pay policy at the 2014 AGM.

In a strongly worded statement, LAPFF chair Kieran Quinn said: “It is inexplicable how Barclays can have gone back on its promise to the 2014 AGM that Sir John would step down.

“Having messed up remuneration for 2013 Sir John has in fact stayed on as chair and presided over another year of still unacceptably high pay for 2014, and is still in place in March 2015.

“It’s nothing short of misleading shareholders.”

Mr Quinn went on to say that Sir John’s involvement in awarding “grossly excessive bonuses” and his support for former chief executive Bob Diamond, amongst other things, had been “disastrous for shareholder returns and the reputation of the bank”.

The LAPFF represents pension funds with collective assets under management of over $240 billion.

Photo by Roger via Flickr CC License

Pension Funds, Other Shareholders Pressure Oracle CEO Over High Pay With Letter to SEC

The CEO of the Oracle software company, Larry Ellison, is one of the highest paid executives in the United States ($67.3 million in 2014) despite numerous calls by shareholders to reduce his compensation package.

Shareholders are fed up. They, led by two of Europe’s largest pension funds, are on Monday filing a letter with the Securities and Exchange Commission (SEC) regarding their concerns with the Oracle’s corporate governance.

From the Financial Times:

Larry Ellison, one of the highest paid executives in the US and co-founder of the Oracle software company, has come under renewed pressure from shareholders over his “excessive” remuneration and “unprecedented” failure to engage with investors.

The Netherlands’ second-largest asset manager and one of the UK’s largest pension funds, will on Monday file a letter to Oracle with the Securities and Exchange Commission, outlining their corporate governance concerns.

More than half of the group’s shareholders have voted against the executive compensation scheme in each of the past three years.

[…]

PGGM of the Netherlands and Railpen, the UK’s Railway Pension Trustee Company, say the company’s “lack of communication” has heightened their concern over pay, boardroom accountability and the independence of non-executive directors.

It is rare for such groups to go public with criticism of a company they invest in, underlining their anger and frustration after four years of trying to engage with the board and company executives.

In their letter to the company, they say: “As global investors, we believe that governance risk is particularly heightened in companies in which the founder serves as CEO or otherwise remains in a leadership role with the company.”

The pension funds aren’t a particularly large shareholder in Oracle – combined they only own about a 0.16 stake in the company, according to the Financial Times.

Photo by Securities and Exchange Commission via FLickr CC License

UK Pension Funds Raise Concerns Over Bonuses, Pay of Corporate Executives

U.S. public pension funds are no stranger to using their sway as major shareholders to push for corporate governance changes.

U.K. pension funds have that same influence – and this week, they used it to call for new rules surrounding executive bonuses and pay.

The pension funds say that executive compensation should be linked to company performance.

Reported by EveryInvestor:

In a letter sent to the chairmen of FTSE 350 businesses the National Association of Pension Funds warned that companies that have failed to create a strong link between executive rewards and performance should expect shareholders to repeat their concerns of spring 2012.

The NAPF also set out some guidelines it wants to see reflected in the pay policies set through 2014.

These include capping executive base pay increases at inflation and keeping them in line with the rest of the workforce. Where this is not the case, companies should offer a sound explanation.

The NAPF also criticised the use of peer group benchmarking where pay is set by comparing it to that of other executives from different companies. The NAPF believes this practice has contributed to the escalation of boardroom pay. It said boards should focus more on their own strategies and less on comparing themselves against their peers.

Ahead of the NAPF Investment Conference that opens in Edinburgh on Wednesday Joanne Segars, chief executive, NAPF, said shareholders were vocal last year and those companies that have failed to take a robust stance on boardroom pay should expect similar opposition this spring.

“Too many companies have allowed the link between pay and long-term business performance to weaken in recent years,” she said.

“Companies should keep executive base pay rises in line with the rest of the workforce, and those that deviate from that should have a good explanation ready. Bonus targets should be challenging and allied to the long-term growth of the business.

“Our members will push back on executives who compare themselves with others to try to justify pay rises. So-called peer comparisons have been a major factor behind rising boardroom pay levels.

Read the letter here.