CofE Tells Its Fund Managers To Vote Down Excessive Bonuses

Stacks Of Coins

The Church of England has instructed its fund managers to "challenge the bonus culture" and vote down pay policies that grant bosses more than 100% of their salary in annual bonuses.

The church, which has £8bn invested in some of the world's biggest companies, said executive pay had become so excessive it was a risk to maintaining a harmonious society.

In a new policy on City pay the church said: "Executive remuneration has become misaligned" and bonuses "appear to have come to be regarded as an entitlement".

The church said it understood that in today's world some people needed to be paid significantly more than others – despite a fundamental tenet of Christianity being that "all individuals are equal before God". But it said the pay differential between bosses and those on the shopfloor needed to be justified.

It pointed out that the archbishop of Canterbury, Justin Welby, receives only three-and-a-half times the average clergy stipend of £21,900.

The policy, created after extensively consulting the Bible, warns that when "material rewards become vastly unequal it becomes harder for people to perceive the truth of equality before God since it contradicts their experience of the world".

The church said the "spiritual trap for the rich" also affects the poorly paid, who can "become convinced they are worthless in God's eyes because they feel worthless in the eyes of the world".

James Featherby, chair of the church's Ethical Investment Advisory Group (EIAG), said: "All staff should be rewarded fairly and executive directors' roles understandably command good salaries."

He said the church's ire was primarily directed at bonuses. "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 over periods of five to seven years."

The church said bonuses of more than 100% of salary could only be justified if bosses had delivered "extraordinary results through exceptional performance to the significant benefit of shareholders".

Analysis of executive pay shows that the median annual bonus of FTSE 100 chief executives has increased from 60% of base salary in 2001 to 150% in 2011. The church also pointed out that in only one year in the past decade did more than 10% of FTSE 100 bosses not receive a bonus.

The church, which took an active role in last year's "shareholder spring" of votes against excessive pay, called on asset managers and pension funds to take a more active approach to reining in pay. "They are – or should be – the main stewards of executive remuneration. But … they tend to remunerate their own executive directors and managers generously."

The pay policy quotes key passages of the Bible to back up its argument, including I Timothy 6:10: "The love of money is the root of all evil" and Mark 10:23-27: "It is easier for a camel to pass through the eye of a needle than for someone who is rich to enter the Kingdom of God."

Powered by article was written by Rupert Neate, for The Guardian on Friday 19th April 2013 00.01 Europe/London © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News