Schemes think salaries for top executives and asset managers are too high, according to a report from the Pensions and Lifetime Savings Association (PLSA)
In its AGM Season Report 2016, published today (1 December), the PLSA examined the annual general meeting (AGM) results for FTSE 350 companies between 1 September 2015 and 31 August 2016.
The report reveals that 87% of pension funds responding to a PLSA member survey, say executive pay is too high
Of that 87%, some 63% believed executive pay is generally too high, while 37% said it is too high in cases of poor performance.
The survey also found 35% of pension funds believe asset managers are not fulfilling their stewardship responsibilities - and there is a strong sense that high levels of pay in the asset management industry are preventing asset managers from properly holding companies to account over pay practices.
The findings come at a time of wide scrutiny of executive pay and its relationship to corporate governance.
PLSA policy lead for stewardship and corporate governance Luke Hildyard said: "There has been a lot of public debate about executive pay recently and our members have clearly expressed their concern. It's time companies got the message and started to reduce the size of the pay packages awarded to their top executives.
"Pension funds make up some of the most long-term and engaged shareholders in UK companies and are understandably worried by the long-term consequences of the pay gap between those at the top and the wider workforce. We will shortly be publishing guidelines encouraging our members, and their asset managers, to take a tougher line on the re-election of company directors responsible for executive pay practices."
The PLSA added it will update its corporate governance policy and voting guidelines to reflect the findings in the report.
These will include stronger recommendations on the re-election of remuneration committee chairs in order to boost accountability and improve governance.
The PLSA has taken a number of other steps to highlight the issue of executive pay.
It asked them to provide fuller information with investors about the culture and working practices of their workforce.
In July the PLSA published its toolkit ‘Understanding the worth of the workforce'.
This outlined the type of information about workforce-related issues that pension fund investors should request from the companies in which they invest.
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