A group representing shareholders who control nearly a fifth of the UK stock market said British companies should consider rewriting employment contracts that guarantee lucrative severance packages for top executives.
The Association of British Insurers has sent a letter to the UK's 350 largest companies encouraging them to review the contracts of top executives. "We've said to companies that if they have old contracts, particularly with regard to pensions, which would commit them to very large payments on severance, then we think it's appropriate for the companies to review them," ABI Director of Investment Affairs Peter Montagnon told Reuters on Thursday.
"It is damaging to the reputation of business when these kind of payments are made to people who haven't added value," Montagnon said.
Executives' pension arrangements became a topic of controversy earlier this year when the former chief executive of Scottish Power left the firm with a payment that doubled the size of his pension pot and allowed him to retire on a full pension at the age of 50.