In an open letter, dated 4 March 2013, the National Association of Pension Funds (‘NAPF’) warns the chairmen of remuneration committees of FTSE 350 companies that shareholders will not support unjustified executive awards in this year’s AGM season. The letter contains guidelines NAPF would like to see reflected in the pay policies set during 2013, including:

  • limiting increases in executive base pay to the rate of inflation, and keeping increases them in line with those for the rest of the workforce;
  • avoiding the use of peer group benchmarking ( where executive pay is set by way of comparison to that of executives from other companies); and
  • ensuring that variable pay is ‘genuinely stretching’ and determined by results that support the long-term growth of the business.

NAPF also encourages remuneration committees to take a firmer line when finalising bonus payments and share awards, to ensure that rewards are aligned with the success of the business over time and that returns on capital are taken into account. NAPF letter dated 4 March 2013: Executive Remuneration 2013 available at: