You must curb sky-high salaries, investment giant warns fat cats
FAT CAT bosses must curb their sky-high pay and pensions or face the consequences, investment firm BlackRock has warned.
The world’s largest investor has written to the chairmen of more than 300 companies demanding that they listen to public anger on wages.
The business said it could vote against pay packets at shareholder meetings if bosses were picking up bigger rises than the average worker.
And it also demanded action on lavish pensions – saying chief executives should not get an unfairly good deal.
Most of the men and women who run firms in the blue chip FTSE 100 index pocket a cash allowance equal to between a third and half of their annual salary.
Antonio Horta-Osorio, for example, the Lloyds boss who allegedly engaged in an affair last summer, was paid £568,000 last year for his pension – about half the value of his salary. On retirement, this can trigger huge payouts for life.
Sir Andrew Witty, who leaves drug maker GlaxoSmithKline in April, will pocket £735,000 a year.
The sums are a stark contrast to the aver- age worker, now that the majority of defined benefit schemes have been shut in favour of riskier defined contribution ones.
Most employers pay around 6 per cent of workers’ salaries into a pension pot.
In the letter, BlackRock’s corporate governance head Amra Balic said she wanted this yawning gap between bosses’ and workers’ pensions to be closed.
‘We expect pension contributions for executives to be in line with the rest of the workforce for new contracts,’ she wrote.
‘Executive pay should be strongly linked to performance, by which we mean strong and sustainable returns over the longterm, as opposed to short-term hikes in share prices.
‘Pay should only be increased each year, if at all, at the same level of the wider employee base, and in line with inflation.’
BlackRock is likely to command a hearing in boardrooms. The company controls £4trillion of assets and is thought to be one of the top three shareholders for every FTSE 100 company.