UK/BELGIUM - The Local Authority Pension Fund Forum (LAPFF) has called on members to take action at the annual general meeting (AGM) of banking and life insurer KBC, over remuneration concerns.
KBC is the second of a list of companies identified by the LAPFF where "poor compensation practice and poor performance in other core corporate governance areas are cause for concern over these companies' abilities to generate sustainable returns in the long-term".
Councillor Ian Greenwood, LAPFF's chairman, contacted Jozef Cornu, the chair of KBC's compensation committee, in February to outline the concerns of the forum, including:
The LAPFF said Greenwood used the letter to express concern about a "lack of clarity" at KBC over remuneration issues and to highlight shareholders' rights, to know where their money is going and how much the directors are earning from the business.
However, KBC has failed to reply to the concerns so the LAPFF is now urging its members, 49 local authority pension funds, to "oppose both the re-election of a member of the remuneration committee and the discharge of the board" at the AGM on 30 April 2009.
"The Forum values dialogue higher than public confrontation; however KBC has not taken the opportunity to explain to us in more detail how their remuneration policy is meant to align management interest adequately with shareholder interest," said Greenwood.
The action against KBC follows an earlier move against the US financial services firm T.Rowe Price at the beginning of April, when the organisation urged members to "withhold support" for members of the remuneration committee over the issue of executive pay, following calls from government and regulators for shareholders to become more engaged. (See earlier IPE article: LAPFF targets T.Rowe Price over execs pay)
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