01
Apr
2020

Corporate governance COVID-19 update

Commenting on dividend payments in the current climate, Chris Cummings, Chief Executive of the Investment Association, said:

“Investment managers seek to deliver long-term returns on behalf of individual savers and institutions such as pension schemes and charities, and they recognise the need for the wider economy to be supported during this unprecedented crisis.

"We see three key points in addressing the dividend challenge.

"First, we expect boards to be taking decisions on their dividends based on what is best for their business over the long term; they will have to decide if any dividend payment is sustainable in light of the current market conditions and business needs.

"Second, investment managers would certainly expect companies to follow the guidance of their regulator and have been supportive of companies that have stopped their dividend to retain much needed cash for the business so far. 

"Third, importantly, we should not lose sight of the crucial role of dividends for the wider economy, and the current situation should not be used as an opportunity to rebase or reduce the dividend unnecessarily. Shareholders would expect companies to restart them as soon as it is prudent to do so.”

 

Commenting on executive pay in the current climate, Chris Cummings, Chief Executive of the Investment Association, said:

“Executive pay should always be linked to long term company performance and take account of the shareholder experience, not just financial performance. If companies are stopping dividend payments, boards and remuneration committees should be considering how this impacts on executive pay both for the current year and also in relation to the year the dividend was for.”

For further information, please contact:

Katie Martin, Head of Communications: [email protected]

T: +44 (0)20 7269 4655

Helen Ayres, Communications Manager: [email protected]theia.org 

T: +44 (0)20 7269 4620

David Parton, Communications Executive: [email protected]

T: +44 (0)20 7269 4625

IA press office: [email protected]

T: 020 7269 4696

About the Investment Association (IA):

  • The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the investment management industry supports 115,000 jobs across the UK.
  • Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
  • Our purpose is to ensure investment managers are in the best possible position to:
    • Build people’s resilience to financial adversity
    • Help people achieve their financial aspirations
    • Enable people to maintain a decent standard of living as they grow older
    • Contribute to economic growth through the efficient allocation of capital.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
  • The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.