The Investment Association (IA) will for the first time name and shame firms with poor levels of diversity and excessive executive pension contributions in this year’s AGM season.

Via its Institutional Voting Information Service (IVIS), which provides corporate governance research to shareholders, the IA will “red top” companies – the highest level of warning IVIS issues – that have no or only one women on their board.

IVIS will also issue its second highest warning “amber top” for companies not on course to meet the requirements of the Hampton-Alexander review, which encourages companies to have 33% of their board comprised by women by 2020. IVIS will also highlight any board with women representing 25% or less.

Director of stewardship and corporate governance at the IA Andrew Ninian said: “The Hampton-Alexander review has set the roadmap to deliver greater diversity in the boardroom, but a frustratingly high number of companies are still failing to follow it.

“Our strengthened IVIS approach reflects the fact investors want to see companies do more than take a tokenistic step of appointing a single woman to their board and consider that job done.

“Evidence clearly shows that more diverse boardrooms make better decisions. Investors want to see greater diversity in the companies they invest in to ensure our savers and investors are getting the best returns possible.”

Red top alerts will also be reserved for companies paying pension contributions to executive directors at rates above the majority of the workforce.

Ninian explained: “The IA’s Remuneration Principles set out shareholder expectations on executive pension contributions and our members have been clear this is an issue of fairness and pension contributions should be aligned with the majority of the workforce.

“The new IVIS approach reflects our members’ view that newly appointed directors should receive a pension contribution equal to that of the majority of the workforce.

“IVIS will highlight those companies that pay higher pension contributions to newly appointed directors.”

This is reproduced from Investment Week; all views are from the publication. This originally appeared online on 20 February 2019.