U.K. Companies Face Naming and Shaming Over Director Pensions

(Bloomberg) -- The Investment Association, a U.K. industry group, plans to begin identifying companies whose pension contributions to directors are out of line with those given to the rest of their employees.

The group will start next year to single out firms that have an existing director whose pension contribution exceeds 25% of salary. Its worst ranking will be reserved for companies that also have no “credible plan” to bring contributions for directors into line with those for the rest of their workforce by the end of 2022, the association said in a statement on Friday.

The sternest warning, knows as a “red top,” will also apply to companies that appoint a new director with an out-of-line pension contribution.

“Companies with high executive pension payments who don’t provide that plan risk facing further shareholder rebellions in their 2020 AGMs,” Andrew Ninian, IA’s director of stewardship and corporate governance, said in the statement. The move is part of the group’s broader effort to rein in executives’ compensation.

IA says it represents more than 250 U.K. investment-management firms with more than 7.7 trillion pounds ($9.5 trillion) of assets. Its Institutional Voting Information Service monitors companies in the FTSE All-Share Index and the top 50 companies in the FTSE Fledgling Index for compliance with corporate governance rules and best practice.

To contact the reporter on this story: Benjamin Robertson in London at brobertson29@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry

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