Regulators and supposedly some shareholders are worried about high pay in the ever-powerful investment industry.
Corporate governance teams at these fund houses are sometimes happy to criticise excessive pay at big media companies (WPP), or labour issues at big retailers (Walmart), or the lack of board diversity at big commodity conglomerates (Glencore), but they seem to be very shy to talk about their own executives’ pay.
If any other industry paid its top executives multiples of what other company bosses earned, whether their performance was good, average or underwhelming, shareholders would rightly make a fuss.
One PR executive at a big asset manager literally laughed out loud when he was asked to speak to her corporate governance guru on executive pay within the investment market. She said the team almost certainly would not comment, on or off the record; the topic is “just too close to home”.
Martin Gilbert, chief executive of Aberdeen Asset Management, Schroders’ struggling UK competitor, received £4.3m last year. This was 10 per cent less than what Mr Gilbert earned in 2014, but it was clearly too much in the eyes of some shareholders, a third of whom staged a rebellion at the company’s annual meeting in January by rejecting its remuneration report.
Big companies recognise that being openly criticised by influential shareholders is bad PR, and they respond to this threat. This in turn improves corporate behaviour.
It is worrying that fund companies are let off the hook in this respect by their shareholders.
Please read the full article from the FT here.