Church Plans to use Clout over City Bonuses

Church Plans To Use Clout Over City Bonuses


The Church of England announces a plan to use its power as
a large City investor to bring about pay restraint in boardrooms.


3:19pm UK,
Friday 19 April 2013

The Church of England has billions invested in
companies

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The Church of England plans to use its £3bn voting clout to
tackle excessive City bonuses as it seeks to reignite last year's "shareholder
spring".

The Church, which holds a significant amount of its £8bn assets as shares in
companies, said it will challenge the City's bonus entitlement culture by
rejecting soaring director pay deals as the annual meeting season gets under
way.

Its new policy is based on Christian principles, but the Church acknowledged
there is "no direct biblical guidance" on executive remuneration.

James Featherby, chairman of the Church of England's Ethical Investment
Advisory Group (EIAG), said: "We want to see lower annual bonuses and greater
emphasis on rewarding executives who manage ethical, social and environmental
issues well and so deliver enduring corporate success."

Last year's shareholder spring saw a number of controversial City pay deals
voted down, with firms including Aviva, Prudential and Cookson feeling the wrath
of investors.

The Church has big stakes in companies including Shell, Google, BP,
GlaxoSmithKline and HSBC.

It only backed around a third of remuneration reports last year and has
rejected pay packets at Lloyds, Barclays, Royal Bank of Scotland and HSBC for
the past two years.

It declined to say if it will vote against bank pay plans again at this
year's AGMs, which kick off next week with the Barclays shareholder meeting.

The Church said executive pay at FTSE 100 companies has generally lost touch
with revenues, profits and shareholder returns.

It added that annual bonuses appear to be "regarded as an entitlement", which
can spur 'short-termism'.

Instead it wants companies to clearly state the highest and lowest paid staff
to reduce pay inequality.

The Church also called for an end to bonuses worth more than salary, except
in extraordinary cases, while long-term incentives should cover five to
seven-year time spans and be paid only in shares.

Its policy says: "In extreme circumstances excessive variable rewards may eat
into shareholder returns, especially if a culture of entitlement or greed is
fostered throughout the business.

"In egregious cases, public outrage at excess or business failings may risk a
company's social licence to operate."

The EIAG oversees investments made by the Church Commissioners for England,
the Church of England Pensions Board and the CBF Church of England Funds, which
together hold more than £8bn of assets.

A major landlord, its property holdings include London's Hyde Park Estate.
The Church's guidelines already ban investment in areas such as high-interest
lending, gambling, alcohol and pornography.