In a letter sent to the chairmen of FTSE 350 businesses, the NAPF warned that employers have failed to create a strong link between executive rewards and performance should expect shareholders to repeat their concerns of spring 2012.
The NAPF also set out some guidelines it wants to see reflected in the pay policies set through 2013. These include capping executive base pay increases at inflation and keeping them in line with the rest of the workforce.
"Shareholders were very vocal last year, and those companies that have failed to take a robust stance on boardroom pay should expect similar opposition this spring," said NAPF chief executive Joanne Segars.
The NAPF states that where this is not the case, employers should offer a sound explanation.
The NAPF also criticised the use of peer group benchmarking, where pay is set by comparing it to that of other executives from different companies.
The NAPF believes this practice has contributed to the escalation of boardroom pay. It said boards should focus more on their own strategies and less on comparing themselves against their peers.
Ahead of the NAPF Investment Conference that opens in Edinburgh on Wednesday, Segars said: "Companies should keep executive base pay rises in line with the rest of the workforce, and those that deviate from that should have a good explanation ready.
"Bonus targets should be challenging and allied to the long-term growth of the business."
Segars added: "The rules on executive pay are set to change with the introduction of a binding vote later this year. It is important that companies and their institutional shareholders work closely together to ensure the new rules deliver high standards."
