Ahead of the 2019 AGM season, the Investment Association (the IA) has announced that it intends to highlight companies which are not complying with expected targets in relation to board diversity or executive pension contributions. It will do so by issuing “red tops” (its highest level of warning) and “amber tops” through its Institutional Voting Information Service (IVIS).
On executive pensions, IVIS will red-top a company if it proposes a new remuneration policy that does not explicitly set any new executive director’s pension contributions in line with the majority of the workforce, or if it appoints an executive director on or after 1 March 2019 whose pension contribution is above the level of the majority of the workforce. It will also amber-top a company if any of its existing executive directors receives a pension contribution of 25% of salary or more.
On diversity, IVIS will amber-top a company if less than 25% of its board are women. However, it will red-top a FTSE 350 company if it has only one woman, or no women, on its board(unless it meets the Hampton-Alexander Review target of 33% of women on the board by 2020).