Fund managers and exec pay: is the pot calling the kettle black?

Does the asset management community need to take a look in the mirror when  it comes to executive remuneration? Emma Cusworth investigates

“Some are perhaps hesitant to be vocal because they are so aware of [high pay at their own firms].”

Stefan Stern, High Pay Centre

As the annual furore over excessive executive pay gets underway, there are some important questions about fund managers’ own pay scales and structures that warrant close attention. Some of the largest fund managers including Blackrock and Franklin Templeton, have come under fire for high executive pay, which may weaken their role as stewards when it comes to addressing excessive pay at investee companies.Yet, as the big fund management houses represent an ever-increasing proportion of total asset ownership, their role as stewards for trillions of dollars in clients’ money grows in importance. It becomes imperative, therefore, to consider how willing and able the fund management industry is in addressing excessive executive remuneration.FUND MANAGERS UNDERESTIMATE THE PROBLEMThe asset management industry has come in for sharp criticism from some quarters, which may seem unsurprising given the shareholder revolts of previous years have done very little to turn the tide of executive pay.In 2016, the Investment Association’s Executive Remuneration Working Group (ERWG) charged with looking at the issues surrounding executive pay – which included high-profile fund management figures such as L&G chief executive Nigel Wilson, soonto-be L&G head of personal investing Helena Morrissey, and Sainsbury’s chairman David Tyler among others – was lambasted by the director of the Institute of Business Ethics (IBE), Philippa Foster Back, for its failure to recognise the seriousness of the problem of excessive exec pay and the urgency with which it needs to be addressed.