The head of the London Stock Exchange has come under fire from unions and thinktanks for suggesting that the leaders of UK companies should have higher pay levels similar to the US.
LSE chief executive Julia Hoggett said firms in the UK were struggling to lure top executives because rivals in the US could offer more attractive packages.
She said: “Often the same proxy agencies and asset managers that oppose compensation levels in the UK support much higher compensation packages in different jurisdictions, notably in the US.
“This lack of a level playing field for UK companies is often not discussed, or if it is, the downside risks to our companies, our economy and our competitiveness are not part of the conversation.”
FTSE 100 CEO pay
FTSE 100 CEO pay up 12% in 2022
High Pay Day comes early in 2023
Executives should get below-inflation pay rises, say investors
The High Pay Centre, a body that tracks executive pay, called Hoggett’s comments “deluded” while TUC general secretary Paul Nowak said leaders’ pay should be restricted, not boosted. He added: “Without urgent action, the cost of living crisis will deepen inequality in this country even further. It’s time to hold down pay at the top – not wages for everyone else.”
High Pay Centre director Luke Hildyard, said: “Typical pay for a FTSE 100 chief executive last year was £3.4m, which sounds like enough money to attract and retain the ‘domestic and international talent’ described in [Hoggett’s] article.
“The UK is already one of the most unequal countries in Europe, with getting on for a fifth of total incomes in the country hoovered up by the richest 1%, according to some estimates.
“The idea that paying millionaire executives even more is any kind of solution to stagnating living standards across the country seems a bit deluded.”
Companies are likely to have more freedom around listing companies in the City by the end of the year as the Financial Conduct Authority this week announced a consultation on relaxations of regulations. The changes get rid of the stricter “premium” class of London stock market listing, and make it easier for company founders to keep control of businesses using US-style “golden shares”.
The LSE conceded that the changes would mean higher risks for investors because listed companies would face fewer checks.
Hoggett, however, argued that the changes left out the “critical element” of executive pay. Companies were too often “hampered” by asset managers voting “against executive pay policies even when those pay levels are significantly below global benchmarks”, she wrote.
FCA chief executive Nikhil Rathi said that more access to a wider range of companies listing would provide greater opportunities for investors in UK markets and help create jobs and growth.
According to media reports the LSE has seen a growing number of firms seeking to delist from London and avoid the City in recent months. Among them was Cambridge chip designer Arm, which decided to list in New York rather than London.
CRH, the world’s largest building materials company, has also said it plans to leave London for the US and Keith Barr, chief executive of InterContinental Hotels Group, said in April that London was “not a very attractive place” to list.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
The FCA review was commissioned by Rishi Sunak, when he was chancellor, in 2021.
Latest HR job opportunities on Personnel Today
Browse more human resources jobs
