Media reports in the UK say that the Association of British Insurers (ABI) has written to the heads of all the leading 350 public companies warning them to show restraint in executive severance packages.
Both the Guardian and Financial Times reports attribute the ABI’s broadside to the fallout from the sacking of Ian Russell, the former chief executive of utility group ScottishPower.
The GBP5 million total pension and severance settlement given to Mr Russell was widely seen as excessive at a time when his company was putting up energy bills for its customers. The debacle triggered another round of similar ‘fat cat’ stories involving firms such as Network Rail and Cable & Wireless, all of which is said to have displeased the ABI.
The insurers’ body holds considerable influence in the city since its members are made up from the pension funds that invest huge amounts in the UK’s biggest firms.
The Financial Times quotes Peter Montagnon, the ABI’s director of investment affairs, as saying: It is really damaging to the reputation of business if companies pay extremely generous pensions – which are not related to performance – when most of the workforce is seeing their pension expectations reduced.