Following the Investment Association’s outline of its expectations of companies this AGM season, Ashley Hamilton Claxton, Head of Responsible Investment at Royal London Asset Management (RLAM), said:
“We welcome the Investment Association’s (IA) move to publicly apply pressure on companies this AGM season, and the significant implementation of its ‘Amber Top’ analysis. Whilst we will also be closely monitoring the key topics highlighted by the IA (ethnic diversity on boards, climate change and executive pay), RLAM will additionally be paying close attention to how companies operate in a post Covid-19 world.
“Throughout 2020 we observed many FTSE 100 companies implementing pay cuts and salary freezes. This year’s AGM season will heavily revolve around how remuneration committees decide (if at all) to make changes to executive pay and whether they will keep any reformed performance measures and targets in place.
“We may see an increase in companies switching to restricted share plans, setting new vesting levels for share plans, or amending performance measures to offset the negative effects of the pandemic. In our analysis we will be taking into account wider workforce considerations, such as the use of furlough schemes, as a context for committee decisions on executive pay.”
“RLAM also expects to see an increased focus on ESG considerations when agreeing incentive plans for executives, especially those linked to climate change or diversity. This has been a developing practice for the last couple of years and is a noteworthy step in the right direction towards encouraging best standards.”
“Finally, following the Parker Review and targets now set in the UK, we will be engaging with companies on both gender and ethnic diversity. We will also be asking Boards to provide more detail on how they incorporate feedback from their workforce and wider stakeholders into business decisions.”