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Church group tells investors to reject company fat cats


A CHURCH GROUP has targeted fat-cat executive pay-offs as part of its strategy to encourage church investors to be proactive in the companies in which they invest.

In its 2004/05 report, Ethical Investment: Is it worth it?, the Church of England Ethical Investment Advisory Group, (EIAG) says that there were "several high-profile compensation cases in 2004, including Sir Peter Davis's settlement of over £4 million on his departure from Sainsbury's".

The group shows that annual cash bonuses for the FTSE 100 directors had risen for a second year in a row. Salaries for directors rose by 6.5 per cent; and total cash pay rose by just under ten per cent.

EIAG said that half of the ten largest revolts by shareholders against companies' polices were because of remuneration policies. Shareholders were taking a more active interest in the governance of their companies, it suggested.

In a survey of companies, it found that more than a quarter of Next's shareholders opposed the company's remuneration report; 27.7 per cent were against J. Sainsbury's remuneration report; 20 per cent voted against the Hays report; and 17.1 per cent voted against the Xstrata report.

The fund manager of the Central Board of Finance (CCLA), voted at 113 meetings of UK companies, and took action against companies' remuneration schemes on 30 occasions.

The Church of England Pensions Board, through its fund managers Henderson, took action against 64 companies. UBS, its other fund manager,  undertook 27 discussions with companies about their remuneration structures during the year, the report said.

The Church Commissioners opposed the reports of UK companies it invests in on six occasions, and on overseas companies on 64 occasions.

Church investors could have earned an extra 0.65 per cent had they been free to invest in all the companies represented in the All Share Index. But the figure, although higher than 0.06 per cent from the previous year, was only "illustrative", the secretary to the group, Neville White, said.

Offshoring (the relocation of service-sector jobs from the UK to markets such as India) should not be regarded as an implicitly unethical practice, said Mr White. Rather, investors needed to be sure that working conditions were, or remained within, the Church's ethical guidelines.

EIAG cost the Church £180,000 in the year up to March 2004.

New appointment
John Reynolds, CEO of the European division of the specialist investment bank Houlihan Lokey Howard & Zukin (Europe), will succeed the Ven. Ian Russell on 1 January as the Chairman of EIAG, it was announced on Monday.

Mr Reynolds is 39 and married, with four children. He is also the Vice President of Save the Children. He holds a degree in theology from Cambridge.

EIAG's report is available from: CCLA Investment Management Ltd, 80 Cheapside, London EC2V 6DZ.

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