£17bn Church Investors Group to vote down excessive pay deals
The Church Investors Group, which manages £17bn on behalf of the Church of England and 58 charities and organisations, has written to 350 leading companies warning them it intends to vote against excessive executive pay at annual meetings. This year, many companies will submit bonus deals to a binding rather than an advisory vote at AGMs. Recently, major institutional investors including the world’s largest fund manager BlackRock and Standard Life have warned that they could oppose executive pay deals. Investors also caused tobacco group Imperial Brands to abandon a proposed pay rise for CEO Alison Cooper.
The Church of England, a major institutional investor, has put UK company bosses on notice that exorbitant pay deals will not be tolerated.

The Church Investors Group, which unites the Church of England and 58 related charities and organisations managing a combined £17bn, has written to the 350 biggest companies on the stock market to set out how it intends to vote at this year’s annual general meeting season.

It is joining the chorus of voices expressing concern about executive pay in a year in which large numbers of companies are putting their bonus deals to a binding vote – rather than an advisory one – at their AGMs.

“We voted against two-thirds of remuneration reports that were proposed last year,” said Adam Matthews, head of engagement for the Church Commissioners – an investment fund manager that is a member of the Church Investors Group – and Church of England Pensions Board.

“We’re saying that when we see pay policies that aren’t justified we will vote against them. We want to see greater use of discretion by remuneration committees.”

The Church Commissioners manage £7bn of the Church of England’s investments, and help funds dioceses and parishes.

Major institutional investors such as BlackRock – the world’s biggest fund manager – and Standard Life have also warned companies that they are on alert for excessive pay deals for company executives. Investors have already scored a victory this year when Imperial Brands, maker of Gauloises and John Player cigarettes, scrapped a pay rise for its chief executive Alison Cooper.

Matthews said this year’s AGM season was important because of the number of binding votes on pay policies, which must be put forward for shareholders’ approval every three years. It has been estimated that about two-thirds of companies in the FTSE 100 have to put their pay policies to a vote this year. Annual pay deals are voted on separately each year, but this is only advisory.

He said there was “collective concern” among investors about pay deals this year, which are being put to a vote at a time when the government is consulting on changes to the way the executive remuneration system operates. The green paper – open for discussion for three months – was launched after Theresa May pledged to reform big business during her campaign to become Conservative leader.

It asked if companies should publish their pay ratio – the gap between the chief executive and the wider workforce. In 2015 chief executives received 128 times the average pay of their staff, it said.

The letter to FTSE 350 companies, signed by James Corah, secretary to the Church Investors Group, urges companies to provide information on pay ratios. It also warned that it intends to focus on climate change, water use and the way companies treat their employees.

Edward Carter, a canon who chairs the Church Investors Group, said: “Our members are committed to playing an active and productive role in advocating for improved governance at this important time of reform.”

The Church Commissioners’ largest stakes are in banking groups such as Lloyds and HSBC, supermarket group Tesco and pharmaceutical company AstraZeneca.



Matthews also warns that the investment group keeps a close interest in climate change. In the past the Church has challenged BP and Shell to take responsibility for their carbon footprints and limit their contribution to global warming by submitting shareholder resolution calling on the energy companies “to adapt their businesses over the long term for a low carbon economy”.