Church comes out against the City’s bonus cul­ture

The Church of England - - NEWS -

A TOUGH POL­ICY on bonuses has been adopted by the Church of Eng­land on the rec­om­men­da­tion of the Eth­i­cal In­vest­ment Ad­vi­sory Group EAIG).

The pol­icy calls on church in­vest­ing bod­ies to chal­lenge the bonus cul­ture and rec­om­mends that ex­ec­u­tive direc­tors in re­ceipt of com­pet­i­tive salaries should not be awarded bonuses of more than 100 per cent of base salaries for tar­get per­for­mance.

“Awards of more than 100 per cent of base salary can only be jus­ti­fied if an ex­ec­u­tive di­rec­tor has de­liv­ered ex­tra­or­di­nary re­sults through ex­cep­tional per­for­mance to the sig­nif­i­cant ben­e­fit of share­hold­ers,” the pol­icy states.

The pol­icy stresses the im­por­tance of schemes that pri­ori­tise long-term over short-term per­for­mance. It rec­om­mends that com­pa­nies have long-term in­cen­tive plans for ex­ec­u­tive direc­tors cov­er­ing five to seven years that should be paid in shares held for the long-term.

Com­pa­nies are to be en­cour­aged to re­ward per­for­mance on eth­i­cal, so­cial and en­vi­ron­men­tal is­sues as well as fi­nan­cial is­sues.

The pol­icy lists as ex­am­ples ‘eth­i­cal busi­ness con­duct such as tax, bribery and treat­ing cus­tomers fairly’, ‘re­spect for hu­man rights and co-op­er­a­tion with those seek­ing to cre­ate the right con­di­tions for a just so­ci­ety (eg NGOs, government)’ and ‘en­vi­ron­men­tal sus­tain­abil­ity (eg green house gas emis­sions and water ef­fi­ciency)’.

The pol­icy states that ‘com­pa­nies should ap­proach re­mu­ner­a­tion and re­ward in a holis­tic way for all staff’ and says that they should dis­close how they mon­i­tor and mange in­ter­nal pay dif­fer­en­tials and trends.

Church of Eng­land bod­ies, in­clud­ing the Church Com­mis­sion­ers, man­age over £8bn in as­sets, in­clud­ing prop­erty and agri­cul­tural land.

Ed­ward Ma­son of EIAG told the Fi­nan­cial Times he ex­pected them to sup­port only about one in three re­mu­ner­a­tion re­ports this spring.

More than half of the £3bn the Church Com­mis­sion­ers hold­ing in eq­ui­ties is in­vested in overseas com­pa­nies. The Com­mis­sion­ers could there­fore be vot­ing against bonus pay­ments in the US as well as in the UK.

Church of­fi­cials pointed out that the Arch­bishop of Can­ter­bury re­ceives only three times the stipend paid to a par­ish priest and ex­pressed the hope that the new pol­icy would help change think­ing about bonuses so that in the end the Church would not have to vote against re­mu­ner­a­tion pack­ages.

The pol­icy con­cludes: “The sys­tem and cul­ture of ex­ec­u­tive re­mu­ner­a­tion that has devel­oped over the last 30 years, to­day faces un­prece­dented ques­tion­ing. Turn­ing the tide will take courage and lead­er­ship from both the non-ex­ec­u­tive direc­tors who de­ter­mine re­mu­ner­a­tion and the ex­ec­u­tive direc­tors who re­ceive it. We will work col­lab­o­ra­tively and in par­tic­u­lar sup­port com­pa­nies who take risks and model a dif­fer­ent way of do­ing things.”

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