C of E set to target bonuses at city AGMs

The Church, which holds a significant amount of its £8bn assets as shares in companies, said it will challenge the City’s bonus entitlement culture by rejecting soaring director pay deals as the annual meeting season gets under way.

The latest policy is based on Christian principles, but the Church acknowledged there is “no direct biblical guidance” on executive remuneration.

James Featherby, chairman of the Church of England’s Ethical Investment Advisory Group, said: “We want to see lower annual bonuses and greater emphasis on rewarding executives who manage ethical, social and environmental issues well and so deliver enduring corporate success.”

Last year’s “shareholder spring” saw several controversial City pay deals voted down, with firms including Aviva, Prudential and Cookson feeling investors’ wrath.

The Church has big stakes in firms including Shell, Google, BP, GlaxoSmithKline and HSBC. It only backed about a third of remuneration reports last year and has rejected pay deals at Lloyds, Barclays, Royal Bank of Scotland and HSBC for the last two years.

It declined to say if it will vote against bank pay plans again at this year’s AGMs, which kick off next week with Barclays.

The Church said executive pay at FTSE 100 companies has generally lost touch with revenues, profits and shareholder returns. It added that annual bonuses appear to be “regarded as an entitlement”, which can spur short-termism.

Instead, it wants companies to identify the highest and lowest paid staff to reduce inequality.

The Church also called for an end to bonuses worth more than salary, except in extraordinary cases, while long-term incentives should cover five to seven-years and be in shares.