UUÂãÁÄÖ±²¥

The UK’s largest asset manager, Legal and General Investment Management (LGIM), has announced that it is to stop providing almost all of its direct feedback to issuers in relation to executive remuneration after the asset manager found that the feedback that it provided to companies was usually ignored. This change of approach regarding engagement was set out in LGIM’s 2021 annual letter to the chairs of remuneration committees.

The letter also encouraged companies to provide free shares to all employees in order to better incentivise them, as well as pay their employees the real living wage—£10.75 per hour in London and £9.50 everywhere else in the UK.

LGIM is not the only asset manager to note the frustration that follows when issuers do not always take feedback on board. Speaking on BMO GAM (EMEA)’s own engagement with companies, its Director of Responsible Investment, Nina Roth, had the following to say on the subject:

‘We engage across a broad spectrum of themes, including climate change, labour standards, human rights and corporate governance. Our engagement on wages covers all corporate levels from living wages in the general workforce and companies’ supply chains to appropriate executive remuneration. While there is clearly some frustration on limited corporate action, we continue to engage on executive pay, participate in remuneration consultations and vote against outsized pay packages.’

In 2020, LGIM 128 remuneration policies put to a vote at UK company AGMs out of a total of 341 put forward (roughly 37.5% opposition). It is expected to be even tougher on executive pay during 2021, with LGIM declaring in its most recent that it is ‘increasingly concerned about the misalignment of both the structure and the level of executive pay versus company performance’.

More recently, in its September 2021 , LGIM stated that it may vote against the remuneration reports of companies that insist on paying out bonuses to executives, despite the fact that during the coronavirus (COVID-19) pandemic they had been forced to seek support from the government or shareholders and/or make staff redundancies.

The asset manager has also this week announced the of Kurt Morriesen, a former senior adviser for impact investments and sustainable development goals at the United Nations Development Programme (UNDP), as head of the asset manager’s global investment stewardship team, to replace Sacha Sadan who left LGIM in 2021.

In the press release on Morriesen’s appointment, LGIM noted that during the year of COP26, its global investment stewardship team ‘continues to apply pressure on companies to provide climate accountability; and achieve net-zero emissions; focus on biodiversity and deforestation; as well as to expand its programme of deeper engagement’. There is, however, no mention of remuneration to be found, which leads one to assume that the asset manager’s stewardship priorities in the near future will be firmly with ESG issues.