BlackRock has called for an end to the excessive pay received by FTSE executives, ahead of critical shareholder votes to be held this year.
In a letter to the bosses of over 300 UK companies, BlackRock demanded that huge pay outs for executives be stopped as well as excessive pay rises.
The company also specified that it would only approve salary rises for executives if worker’s wages were increased by a similar amount. The letter also detailed an expectation that pension contributions for executives were also in line with all other employees.
BlackRock is currently the major shareholder in almost every company within the FTSE 100 and FTSE 250. The company has £4.2tn of investments and describes itself as the world’s largest fund manager.
Amra Balic, Head of Investment Stewardship in Europe, said in the letter, “Executive pay should be strongly linked to performance, by which we mean strong and sustainable returns over the long-term, as opposed to short-term hikes in share prices.”
“We consider misalignment of pay performance as an indication of insufficient board oversight, which calls into question the quality of the board.”
“We believe that shareholders should hold directors to a high standard in this regard.”
“In case of a significant pay increase year-on-year that is out of line with the rest of the workforce, BlackRock expects the company to provide a strong supporting rationale.”
“Large increases should not be justified principally by benchmarking.”
BlackRock’s call comes as the movement against excessive pay gains momentum. In April last year, 60 per cent of shareholders voted against plans to pay BP chief executive, Bob Dudley, £14 million after there were job cuts and pay freezes. In July 2016, Prime Minister Theresa May said there should be annual binding votes on executive pay.