I was at an event earlier this week at which James Charrington,
chairman of BlackRock in Europe, was castigating those companies
that plump up the pay packages of senior executives by making large
contributions to their pensions.
His point was that it was inequitable to treat these senior
executives differently to the rest of the workforce.
BlackRock's voting guidelines may it clear that they will look
very critically at remuneration policies 'where pension
benefits for executives are inconsistent with pension benefits for
the wider employee base'.
By coincidence, my next meeting was at the TUC, which has
campaigned on this issue for a long time. The most recent edition
of its annual PensionsWatch survey, published in September 2015,
showed that the average employer contribution to senior
executives' pensions in the FTSE 100 was 34% of salary.
By contrast, the typical employer contribution for a worker in a
defined contribution pension scheme is just 6%. In comparison to
that figure, it is difficult to see the additional pension
contributions to executives as anything other than an attempt to
supplement their already generous salaries through sleight of
Although there will always be arguments about whether senior
executives' salaries are fair or deserved, nobody disputes the
basic notion that those salaries should be higher than those of
their colleagues at lower levels of the company because they
shoulder greater responsibilities. But, if those responsibilities
have already been factored into their base pay, there is no
justification for preferential treatment in respect of other
elements of their reward package.
This is not just a matter of pensions. As the ICSA said in its
submission to the BEIS Select Committee Inquiry on corporate
governance, it is at the very least questionable 'whether it is
appropriate that senior employees have greater opportunity for
percentage based benefits – for example in terms of bonus,
pension entitlement or share option schemes − or whether
these should be open to all employees on the same basis'.
The world's largest asset manager and the trade unions may
not seem like natural allies. But if they can agree on this issue
– let alone the radical firebrands at ICSA – then
surely everyone else can. Hopefully the Select Committee will use
its report to give companies a gentle shove in the right
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