Dutch asset manager NN Investment Partners (NNIP) has called on the industry to take active steps towards curbing excessive executive pay and use remuneration to encourage long-term sustainable behaviour.
The asset manager said remuneration should be based 100% on performance and called for performance criteria to be measurable, transparent and relevant to the company’s long-term success.
Furthermore, NNIP said it expects companies it invests in to include non-financial sustainability measures in remuneration policies.
It has warned that it may vote against a remuneration policy if companies do not reward the deliverance of a sustainable business strategy that links sustainability key performance indicators (KPIs) to compensation.
The call for active steps comes after the Covid-19 pandemic and recent energy crisis highlighted stark income inequality, triggering a broader debate about executive pay and compensation levels.
Florentine van den Eerenbeemt, a responsible investment specialist at NNIP, said: “For the world’s highest greenhouse gas emitters, NNIP may vote against the remuneration plan if the company has not incorporated climate change performance elements in the executive remuneration scheme.
“We also use our say on pay votes as a form of escalation – for example, in cases where we are concerned about the lack of progress against set sustainability targets.”
She added: “Generally, we support shareholder resolutions that address material sustainability topics. Even though some proposals do not pass, we believe our vote still sends a strong message to the board.”
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