Ahead of the starting gun being fired on the 2019 AGM season, the Investment Association (IA) [The trade body that represents UK investment managers] has announced it will highlight companies who are lagging behind on diversity, or pay pension contributions to executive directors at rates above the majority of the workforce.
The IA’s Institutional Voting Information Service (IVIS) which provides corporate governance research to shareholders to aid their voting decisions during AGM season, will ‘red-top’ companies who pay newly-appointed directors pension contributions which are not in line with the majority of their employees. A red-top represents the highest level of warning IVIS issues and is reserved for companies where shareholders should have the most significant and serious concerns.
IVIS will also ‘red top’ companies that have no or only one women on their board. IVIS will also issue an ‘amber-top’ (the second highest warning) to companies not on course to meet the requirements of the Hampton-Alexander review, for 33% of women on their board by 2020. IVIS will highlight any board with women representing 25% or less.Andrew Ninian, Director of Stewardship and Corporate Governance at the Investment Association, said:“The IA’s Remuneration Principles set out shareholder expectations on executive pension contributions and our members have been clear this is an issue of fairness and pension contributions should be aligned with the majority of the workforce. “The new IVIS approach reflects our members’ view that newly appointed directors should receive a pension contribution equal to that of the majority of the workforce. IVIS will highlight those companies that pay higher pension contributions to newly appointed directors.“
Similarly, the Hampton-Alexander review has set the roadmap to deliver greater diversity in the boardroom, but a frustratingly high number of companies are still failing to follow it. Our strengthened IVIS approach reflects the fact investors want to see companies do more than take a tokenistic step of appointing a single woman to their board and consider that job done. “Evidence clearly shows that more diverse boardrooms make better decisions. Investors want to see greater diversity in the companies they invest in to ensure our savers and investors are getting the best returns possible.”