By Huw Jones
LONDON (Reuters) - Britain's asset managers have called on company bosses to steer clear of inflation-busting pay rises as the country grapples with a cost-of-living crisis.
The Investment Association, whose 250 members manage assets worth 10 trillion pounds ($11.44 trillion), has written to remuneration committee chairs of FTSE 350 companies, calling for restraint in pay packages put forward for approval at annual meetings next year.
"With the cost-of-living crisis hitting UK households, investors want to see companies show restraint on executive pay and bonuses, ensuring that executive pay packets are balanced against the experiences of their wider workforce, customers, and other stakeholders," Andrew Ninian, IA director for stewardship and corporate governance, said on Thursday.
With UK inflation more than 10% at a 40-year high, the IA said pay increases in line with rising prices may not be appropriate.
The retention and motivation of employees below the executive level will be key and board decisions could affect productivity of the whole workforce, the IA said.
Boards will also be considering long-term incentive grants made to senior executives in 2020 during the pandemic when share prices tumbled and more shares were granted than in previous years to stay aligned with salary multiples.
These awards are due to vest next year, creating potential windfall payments.
"If the committee has decided not to adjust for windfall gains, it should explain and disclose its rationale for doing so," Ninian said.
Pension contributions to top management should be aligned with those available to most of the workforce by the end of 2022, the IA said.
Companies should also spell out how executive bonuses will be linked to meeting their environment, social and governance targets in future years, the IA said.
($1 = 0.8740 pounds)
(Reporting by Huw Jones; Editing by Bernadette Baum)