Third of FTSE 100 companies cut executive pensions

Edmund Heaphy
·Finance and news reporter
Updated
Businessman leading presentation at projection screen in conference room meeting
Nearly a third of the UK's top companies have pledged to cut pension payments for executives. Photo: Getty

Around a third of the UK’s top 100 companies have committed to cutting the pensions of their executives amid investor anger over huge contributions, according to new data.

Some 30 companies listed on the FTSE 100 have made “significant changes” to pension packages, the Investment Association said on Wednesday.

Newly installed directors in 17 companies will be given pension contributions in line with the majority of their employees, while four companies have already reduced pension companies for incumbent directors.

A further three companies have recently appointed directors with pension contributions in line with the majority of their workforces, while six additional companies have reduced contributions for both existing and future directors.

The moves follow intense criticism of bumper pension packages for top staff.

Companies like RBS (RBS.L), BP (BP.L), and Babcock (BAB.L) have in recent years faced high-profile shareholder revolts over pension payouts and executive pay.

A branch of the Royal Bank of Scotland (RBS) stands on Threadneedle Street in London, England, on July 26, 2019. Four major UK banks, including RBS, are set to release interim figures over the coming days. Half-year results for Lloyds Banking Group are due out on July 31, for Barclays on August 1, for RBS on August 2 and for HSBC on August 5. RBS famously received a massive 45.5 billion in bailout funds from the UK government during the 2008 financial crisis, with RBS chairman Sir Howard Davies admitting last year that a decade-long 'focus on survival' meant it was unlikely this money would ever be repaid in full. (Photo by David Cliff/NurPhoto via Getty Images)
30 companies listed on the FTSE 100 have made “significant changes” to pension packages, according to new data. Photo: Getty Images

In May, MPs blasted Lloyds Banking Group (LLOY.L) for its pay and pension packages, calling the 33% pension contribution given to CEO António Horta-Osório “boundless greed.”

Though the contribution is more than double the 13% that other employees get, only 10% of shareholders voted against the payouts.

The Investment Association, which represents around 250 asset management firms, has urged companies to stamp out such inequality across pension schemes.

In February, it issued new guidance that stated that its members wanted executives to be paid pension contributions in line with the majority of their employees.

“Shareholders have been very clear they want pension payments for executives to come down to the same level as the rest of the workforce, said Chris Cummings, CEO of the Investment Association, in a statement.

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“We have seen a clear step-change on both of those fronts during this year’s AGM season, which is welcomed by shareholders,” he said.

Business secretary Andrea Leadsom said the news showed that these issues were “starting to be taken seriously.”

The Investment Association also revealed on Wednesday that there has been a 5% increase in shareholder dissent in 2019 compared to 2018, with 86% of companies now acknowledging when they face revolts.

This compares to just 58% in December 2017, when the association launched its register of company resolutions that have been rejected by more than 20% of shareholders.