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Law360, London (October 19, 2020, 12:30 PM BST) -- Most companies are cutting down their executive pension contributions under mounting pressure from shareholders, who believe managers should not take home extra cash amid the financial turmoil brought on by the COVID-19 crisis, the Investment Association has said.
The trade body that represents fund managers said a survey has shown that 98% of companied listed on the London FTSE 100 exchange have aligned the pension contributions of new directors with that of the workforce or committed to doing so.
"Providing directors with the same pension contributions as the rest of the workforce is fundamentally an issue of fairness," Chris Cummings, chief executive of the association, said on Saturday.
"Given the economic difficulties many people across the U.K. are facing, it is only right that the majority of FTSE 100 companies are now aligning their executive pension contributions with their workforce."
Data showed that 14 companies in the FTSE 100 had reduced pension contributions for existing directors during 2020 and that another 43 have committed to reduce contributions in the future, the association found. Six companies are increasing their pension contributions for their workforce as part of their effort to bring rates into alignment.
But not all companies are making progress, the IA said. Ten companies were found to have at least one existing director receiving a pension contribution of 25% or more with no commitment to align this with the rest of the workforce by the end of 2022.
Another two companies had not committed to align the pension contributions of new directors with that of the workforce, the data found.
The Investment Association said there had been a rise in shareholders voting against directors over pay decisions and lack of diversity in this financial reporting season.
"Shareholders have continued to hold companies to account on executive pay and director re-election, while recognizing the additional pressure companies have been under," Cummings said.
The data also found that nearly half — 43% — of all companies on the FTSE All Share Index withdrew their dividend payments to executives. Investors and regulators have urged companies to think carefully about whether it is appropriate to pay dividends during a public health crisis.
The Bank of England has warned lenders to preserve cash to lend to the pandemic-stricken economy rather than pay shareholders or senior staff bonuses.
RBS, with Barclays, HSBC, Standard Chartered, Lloyds Banking Group and Santander, said in coordinated statements in April that they would omit outstanding dividends for 2019 and not return money to shareholders throughout 2020.
--Additional reporting by Joanne Faulkner. Editing by Ed Harris.
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