The Committees have jointly written to the remuneration committee of G4S ahead of its AGM, with questions on the public contractor’s compliance with Investment Association guidelines on executive and broader “workforce” pension contribution levels. The two Chairs specifically press G4S on whether “pension contributions of 15% of each salary are in line with the pension contribution rates for the rest of the G4S workforce in the UK.”
The group has announced that new, externally appointed executive directors’ pension contributions will be reduced to 15% of salary, but existing directors get 25%, earning G4S its current “amber top”.
The questions follow a similar line of inquiry opened with Lloyds Bank over the last week, Lloyds pension move “smacks of feverish desperation and boundless greed”, regarding the large gap between the “majority workforce” and executive pension contribution rates, currently set at levels which earned the bank group the ”amber” warning rating from the Investment Association that has also now been applied to G4S.
The Investment Association’s guidelines state that, in accordance with the UK Corporate Governance Code, “pension contribution rates should be aligned to those of the workforce … Investors expect new executive directors to be appointed on this level of pension contribution. The contribution rate for incumbent executive directors should be reduced over time to the contribution rate available to the majority of the workforce …”.
Shareholders were due to vote on both Lloyds and G4S’ pay reports today.
In March, the Business, Energy and Industrial Strategy (BEIS) Committee published a report saying that companies must do more to link top bosses’ pay to that of the rest of their workforce. The report said that “huge differentials” in bosses’ pay are “baked into the pay system” and that a heavy reliance on “over-generous”, incentive-based executive pay, too often waved through by weak remuneration committees in the habit of designing ever more complicated pay packages, is at the root of excessive executive pay packages.