It is AGM season for many listed companies; a time to congratulate the management for a job well done, with the award of big bonuses, and boy what a year it has been!  

But wait a minute, the last year has been like no other.  The Covid pandemic has ravaged economies around the world.  Like many other countries, the UK government has thrown a financial lifeline to many companies on an unprecedented scale through the furlough scheme but in some sectors job losses have been unavoidable.  

So against this backdrop its no wonder there are calls for companies to exercise restraint, to look to repay the government (and by implication the tax payer) rather than award big bonuses whilst furlough funds remain unpaid.  

It is reported that those companies who choose not to will be hit with a "red top" alert by the Investment Association ("IA") (a group of 250 fund managers) after it warned companies to show pay restraint.  

The IA's traffic light system provides a guide to big investors on whether a company is complying with best practice in areas of governance such as executive pay.  A "red top" represents the highest level of warning and is reserved for companies where shareholders should have the most serious concerns.

In many ways this is clearly an example of companies needing to exercise good governance and being respectful of the current economic climate.  It does, however, also further highlight the growth of stakeholder capitalism bought about by the Covid pandemic.  Companies cannot afford to be inward looking, rewarding their bosses, without having due regard to their wider stakeholders and accepting the consequences (both financially and reputationally) if they choose not to.  It remains to be seen how many companies will respond to these calls but the majority will want  to tread a careful path as they navigate the new normal.