The secretary of the Church of England’s Ethical Investment Advisory Group (EIAG), Edward Mason, said this week that there was a “systemic problem” of excessive pay for company executives.
Ed Thornton writes in The Church Times:
The question of executive pay was in the news again this week, after the chief executive of the Royal Bank of Scotland (RBS), Stephen Hester, decided to waive a bonus valued at just under £1 million, after facing intense criticism. On Tuesday, the Honours Forfeiture Committee announced that RBS’s former chief executive, Fred Goodwin, would be stripped of his knighthood because of his management of the bank, whose failure contributed to the financial crash of 2008.
Speaking on Wednesday, Mr Mason said: “Remuneration for top banking executives and investment bankers is certainly too high. . . However, I’m uneasy about singling out or vilifying Stephen Hester. There is a systemic problem of excessive executive remuneration.”
But Ken Costa, the Christian investment banker who chairs London Connection, an initiative set up by the Bishop of London, the Rt Revd Richard Chartres, to address financial issues, said that he had “some sympathy” with the decision by the board of RBS to award Mr Hester the bonus.
Speaking on the BBC TV programme HARDTalk on Wednesday, Mr Costa said: “Stephen Hester was part of a solution rather than part of a problem. He brought a wrecked bank to a much better condition than it is. Now if the board of the bank isn’t going to determine the bonus, who is?”
Advised by the EIAG, the Church of England’s investment bodies — the Church Commissioners, the Pensions Board, and the CBF Funds — have taken a tougher line than other investors on executive pay. Last year, the Church Commissioners and the Pensions Board were two of the few institutional shareholders who voted against RBS’s executive remuneration plans at the bank’s annual general meeting.
During 2011, the Commissioners and Pensions Board supported only about 35 per cent of remuneration reports in the UK companies in which they have holdings.