​UK pension funds to step up action over executive pay

first_imgThe PLSA is now considering advising its members to take a harder line if the current trend of controversial pay awards continues into the AGM season.“Most pension funds,” Hildyard said, “are very concerned with the levels of CEO pay we are seeing, and there is certainly a chance investors may use the binding votes next year to get their message across.”Common-sense checkThe tough stand taken by investors against some of UK’s largest companies comes after a period of turbulence in the financial markets, hit by falling oil and commodity prices resulting in thousands of jobs being axed in that sector.Nearly 60% of BP shareholders voted against a £13.8m (€18.1m) pay deal for boss Bob Dudley. The advisory vote came as BP shed thousands of jobs across the company. Mining company Anglo American also faced a 41.3% of shareholder dissent over its remuneration report, which included a £3.4m pay for its chief executive.Investors are also up in arms over advertising firm WPP chief executive Martin Sorrell’s expected £70m payout. Advisory firms ShareSoc and PIRC have urged shareholders to vote against Sorrell’s proposed pay at the company’s annual general meeting on 8 June. PIRC said in its research report that Sorrel’s variable pay amounted to 58 times his salary of £1.1m.Deborah Gilshan, head of sustainable ownership at Railpen Investments, said companies needed to apply a “common-sense check” to pay policy.“Some of the pay packages we see in the market do worry us,” she said. “Companies need to apply the pay policy investors have voted for, but they also need to apply discretion around the edges to really look at those outcomes.”She added: “There is also the fact these outcomes don’t seem to be aligned with the interest of long-term shareholders and stakeholders like customers and employees.”Railpen Investments is the investment manager for the Railways Pension Scheme, which has around £22bn in assets under management.Another significant investor revolt has been at engineering group Weir, which lost a binding vote on its pay policy, meaning it will now have to go back to the drawing board and come up with an alternative plan.Pharmaceutical company Shire, too, received a bloody nose with its advisory pay policy just squeezing through, with only 50.5% of shareholder approval.Railpen’s Gilshan said: “What you have seen with some of these votes against is perhaps where shareholder patience has run out and where remuneration committees need to listen a bit more to what they are hearing from investors in private dialogues and to what shareholders are signalling through their votes.”Pension funds are still smarting from criticism, following the financial crisis, that they did not demand more accountability, through their fund managers, from the companies in which they invest. New rules, which gave investors a binding vote on pay, were introduced in 2013 by then business secretary Vince Cable.The current shareholder backlash comes a few years after the so-called Shareholder Spring of 2012, which led to some high-profile resignations.‘Acid test’ for investorsDaniel Summerfield, co-head of responsible investment at USS, the UK’s second-largest pension scheme, said the binding vote that many companies faced next year would be the “acid test” for investors.“The last time we had the Shareholder Spring, we didn’t have the binding vote,” he said. “So this is the acid test where, if shareholders are really concerned about the pay structures and pay proposals, the way the vote will be cast will have more bite than previous initiatives. Shareholders can vote against policies they don’t agree with.”Railpen’s Gilshan said the key was for companies to listen to what shareholders were actually telling them and act accordingly.“Shareholders are stepping up, and boards have to step up, too, and listen and apply some of that feedback they are receiving as they go into 2017’s binding votes,” she added.Summerfield agreed: “If companies take note – which they should – of the increasing expectations of shareholders for pay to be aligned with performance, then our hope is that policies will ensure pay is aligned with the accretion of long-term shareholder value.” UK pension funds are planning to take a tougher line with recalcitrant companies that award excessive salaries to their executives, as a raft of blue-chip firms have come under fire in recent weeks over executive pay.As companies such as BP, Anglo American, WPP, Reckitt Benckiser, Weir, Shire and Standard Chartered face a sharp backlash over their pay awards, pension funds are warning of an even fierier AGM season next year as many companies come up for their triennial binding votes on their remuneration policies.While remuneration packages at most companies were advisory this year, many companies face a binding shareholder vote next year that normally takes place once every three years.Luke Hildyard, policy lead for stewardship and corporate governance at the Pensions and Lifetime Savings ­Association (PLSA) said: “There is a worry companies are bit tone-deaf to shareholder concerns and, indeed, wider societal concerns.” last_img read more

Institutional investors must get better grasp of dealing costs, says CEM

first_imgThe firm said its international study was one of the most detailed ever done on the subject and gave an indication of the overall size of these costs for the first time.John Simmonds, UK principal at CEM Benchmarking, said: “Transaction costs make up a significant part of the investment costs incurred by institutional asset owners.”Where individual asset owners sat in the range of transaction costs revealed in the study depended on asset mix, volumes of trades, estimates of spreads – or simply whether they were paying more or less than others for similar activities.“These criteria are all possible to monitor and manage as part of regular cost assessment, so institutional investors need to better understand these costs and the factors that drive them,” Simmonds said.He added that there had been a push for cost transparency around the world, but getting the data was the first and hardest part of this effort. “What comes next is a comparison with others on a sensible basis to determine if those costs are reasonable,” he said.Data from the regulator in the Netherlands – which places a particular emphasis on cost efficiency – showed that, in 2017, schemes spent an average 38.5bps on asset management costs. However, this ranged from 9bps to 162bps across the 231-fund sample.Similarly, transaction costs averaged 9bps, but ranged from 1bps to 40bps. Asset owners need to understand the material nature of transaction costs to their overall investment bills, according to a new study by CEM Benchmarking.In a report on the impact of transaction costs among large asset owners around the world, the data and analysis company found that transaction-related charges made up an average of 24% of the total cost of investing.Across its sample of 19 pension funds and sovereign wealth funds running more than €2.2trn, asset owners paid an average 86.3 basis points for investments, of which 20.2bps on average went to transaction costs.This was around the same level as performance fees and about half that of base manager fees or internal management costs, CEM Benchmarking said.last_img read more

O’Brien still has Derby puzzle

first_img Giovanni Canaletto was eased for Epsom with the bookmakers and it could be he bypasses the June 6 Classic. O’Brien, who had already seen winter fancies John F Kennedy and Ol’ Man River fall by the wayside, said: “It was a bit of a messy race and he got caught back a bit. If he’d bolted in today he could have gone to Epsom. I think he could be a horse to come back here for the Irish Derby. “I thought if he was going to go to Epsom then he needed to go to Chester. It looks like it might be a bit quick to go to Epsom, the right thing might be to go to Royal Ascot or come back here for the Irish Derby, something like that with a view to having him next year.” Speculation in some quarters has suggested Found could be added to the Derby field at a cost of £75,000. Speaking after her second to Pleascach in the Tattersalls Irish 1,000 Guineas, O’Brien told At The Races: “She ran a good race, it was a big step up on the last day. We hoped and thought that would happen and she did run a great race. “It’s where she’s going to go from now, whether the lads decide to step her up in trip and go to an Oaks or whatever, I presume everyone will sit and talk about that, probably in the next few days. She has a lot of options open to her. “I never have any problem with what is decided. Gleneagles we always thought would be a specialist miler and we always thought this filly would go further than a mile. “There’s a lot of options, a lot of things to be considered about a lot of different horses and where they are going. Fillies going to the Oaks and what’s going to go to the Derby. There’s a lot of stuff up in the air. Press Association After the second Guineas success of Gleneagles on Saturday, attention on Sunday surrounded the belated return of Giovanni Canaletto under Ryan Moore in the Airlie Stud Gallinule Stakes, but despite a late surge the even-money favourite went down by a neck to the filly Curvy. The Galileo colt had been due to make his reappearance in the Chester Vase, but was ruled out on account of a dirty scope. The race instead went to stablemate Hans Holbein. “She ran a good race. Jim’s (Bolger) filly (Pleascach) is a very good filly and very well trained and she just got away and was gone. Found ran a good race and there wasn’t much between them at the line. Ryan was very happy with her. “A lot of things could be number one – Gleneagles whether he goes (to Epsom) or not, no-one really spoke about it but I’d say the odds are probably more against him than with him going. “I’ve only read in the paper about Found, she is obviously a possible to step up to a mile and a half and there’s other fillies for the Oaks. “The Lingfield horse, Kilimanjaro, you’d think he’d step up, and Hans Holbein is a solid horse who will get a mile and a half well and probably further. All those things are there and open, a lot to be discussed in the next week to 10 days. “Everyone seems happy with Gleneagles. He didn’t do anything this morning, so we’ll see how he is tomorrow. Joseph (O’Brien) will ride him doing a canter tomorrow and we’ll see how he is.” Aidan O’Brien appeared no nearer to establishing his number one Investec Derby contender following the conclusion of Irish Guineas weekend at the Curragh.last_img read more

Niger Tornadoes to Recruit Eight New Players

first_img“We created so many chances last season of which we converted very few. The only option we have now is to strengthen the squad and our attack,” the coach was quoted as insisting. The technical crew of the team is also looking at the midfield and defence. Already, 13 players from NPFL teams have been invited for screening while the number of players to be fired from the present squad has not been disclosed.The coach hinted that camping ahead of the new football season is to begin soon either in Kontagora or Bida.As part of the pre-season programme of the club, Tornadoes is to take part in the Gold Cup Tournament scheduled to hold in Ilorin Kwara State.Tornadoes FC was runners up at the 2017 AITEO Cup, losing to Akwa United on penalty shoot out.The club was also placed 11th on the 2016/2017 NPFL final table.Share this:FacebookRedditTwitterPrintPinterestEmailWhatsAppSkypeLinkedInTumblrPocketTelegram Laleye Dipo in MinnaNiger State owned Niger Tornadoes Football Club of Minna is to recruit eight new players to beef up the team ahead of the next Nigeria Professional Football League (NPFL) season.However, the management of Tornadoes has restricted the ages of players to be recruited to between 24 and 25 years old age bracket.The Public Relations Officer of the club, George Daniya, quoted head coach of the team, Abubakar Bala, as insisting that lack of bite in the attack of team last season was partly responsible for the middle of the table finishing of the Minna team.last_img read more