THE Church of England is leading a campaign to stop companies rewarding their executives with “excessive” pay.
A group of leading charity investors, including the managers of the Church’s £5billion portfolio of property and investments, said soaring salaries and bonuses demonstrated a “wider malaise” in corporate life.
They called for action against large bonuses at the top of major companies, urging investors to use shareholder meetings to vote against unfair pay schemes at firms in which they hold a stake.
The groups detailed their concerns in a letter to The Daily Telegraph, signed by Andreas Whittam Smith, the First Church Estates Commissioner, who is responsible for overseeing the Church’s investments. Other signatories included the Joseph Rowntree Charitable Trust, the Bible Society and the Baptist Union of Great Britain.
Their intervention followed a series of controversies over pay at large banks and other organisations.
In January, a public outcry forced Stephen Hester, the chief executive of the taxpayer-owned Royal Bank of Scotland, to waive his £1million bonus.
Bob Diamond, the chief executive of Barclays, is at the centre of another dispute with shareholders over his near£18million compensation package.
In the letter, the groups accept that business leaders should be “rewarded for success”. But they add: “We are concerned that rewards to executives have been rising out of proportion to rewards to shareholders who own these compa- nies and whose investments are at risk. Concerns about executive pay are indicative of a wider malaise in corporate governance standards.
“As shareholders, we have rights to contribute to the governance of companies in which we are invested. We believe it is our duty to use these rights.”
The letter urges fellow charity investors to exert their influence on the companies in which they have shares to ensure that pay policies are “linked to performance” and are “appropriate”.
The Church believes that charities have a right to intervene in the pay decisions of companies in which they invest.
A spokesman for the Church Commissioners said they would vote against excessive bonuses and long-term incentive schemes for executives. He said some companies were paying their staff increasingly generously despite no improvement in the share price. “There is a bit of an entitlement culture that has built up and we want to challenge that.”
The Church Commissioners have written to the boards of companies of which they hold shares, and called meetings, to urge them to show restraint when setting pay rates for senior executives.
Mr Whittam Smith said: “Until now, charities’ contributions to the public debate about the issue of executive remuneration have been fairly muted. However, with the AGM season upon us, the Church Commissioners and a substantial coalition of other charities wish to put their concerns on the record. They feel that this is the right time for charities to make their feelings on the issue known.” Soldiers from The Black Watch, 3rd Bn The Royal Regiment of Scotland parade in Inverness after returning from Afghanistan