Aviva warns chairmen to justify exec pay

1st Mar 2010 09:33

A fund manager that owns about 1.5% of every company quoted on the FTSE All-share index has warned chairmen they must justify their salaries or face opposition at their annual meetings.Aviva Investors has written to 800 chairmen as fears grow that businesses are not showing enough restraint over the pay of top executives.The letter, sent out late last week, says it expects executives' salary and bonuses to be "prudent, aligned to business strategy and performance over the long term". Signed by Anita Skipper, Aviva's corporate governance director, the letter urged chairmen to make sure chief's pay policy was independent, took account of conditions for the rest of the workforce and did not encourage directors to adopt risky practices, according to the Times."Board pay has always been a particularly high-profile issue and will continue to be so in view of the apparent disconnect there has been between executive pay inflation and the value creation for shareholders," it said."This means that we will be looking for explanations and justifications for levels of pay and why the arrangements are appropriate, and the use of deferrals and clawback."Aviva voted against company remuneration reports more than 800 times last year.The chairmen of the top ten UK listed companies earn an average of £650,000, led by Barclays with a tasty £750,000.