Institutional Investors Focus on UK Board Pay

March 14, 2001 ( - Institutional investors are pressing corporate governance measures on the other side of the "pond", encouraging British companies to put board pay agreements on the annual shareholder ballot.

Eight major institutional investors representing over 5% of the UK stock market are asking 750 of the UK’s largest quoted companies to put their remuneration reports to a voluntary shareholder vote, according to Investment & Pensions Europe.

The move comes in direct response to a recent statement by UK Trade & Industry Secretary Stephen Byers that the government had not yet decided if companies should be forced to put the pay deals of their boards to a shareholder ballot.

The institutions include:

  • the £28bn British Coal Pension Schemes
  • $165bn California Public Employees Retirement System (CalPERS)
  • the £22bn Universities Superannuation Scheme
  • Hermes Pensions Management, which manages around £50bn for the BT and Post Office pension funds
  • Investment managers Baillie Gifford and Gartmore

The institutions say the UK’s system of self-regulatory corporate governance requires a “best-practice solution” to deal with concerns about excessive pay structures for company directors.  The institutions involved want to ensure that these incentives have a “strong link” to company performance.

– Nevin Adams