Julia Hoggett, chief executive officer of the London Stock Exchange, called for a “constructive discussion” on how the UK approaches executive pay. Photo: Holly Adams/Bloomberg
Britain is being held back by a campaign against high wages, the head of the London Stock Exchange (LSE) has warned.
Julia Hoggett said the pay gap between British CEOs and their American counterparts “didn't get enough attention” and called for a level playing field to stop the exodus of companies from the Square Mile.
Her comments came just hours after the Financial Conduct Authority (FCA) said that remove red tape and change London's listing rules to revive the stock market.
A statement on the LSE website said: Ms Hoggett called for a “constructive discussion” on how the UK is approaching executive pay.
She said: “We must encourage and support British companies in the fight for talent on a global basis to keep us attractive. for companies to start, stay and grow.
“The alternative is that we continue to sit back while our biggest export is skills, talent, tax revenue and the companies that generate it.”
1504 The UK invests far more money abroad than attracts
Board fees have long been more lucrative in the US than in the UK, where more restraint is typically promoted.
Mark Freebairn of Odgers Berndtson, a city headhunter, said US companies typically pay around 10 times more than for the same job in the UK.
He added: “This limits the ability of UK firms to convince credible UK candidates and hinders the retention of international talent.
A factor in whether boards want to list in the UK, move to the US or go private takeover.”
Ms Hoggett criticized the decision of some shareholders and trustees to vote against UK executive pay policies, “even when those pay levels are well below global benchmarks.”
She said: “Often the same trusted agencies and asset managers who oppose the level of remuneration in the UK support much higher remuneration packages in various jurisdictions, especially in the US.”
Shareholders rejected the report on Wednesday about Unilever's salary after proxy advisors said its new chief executive's salary was excessive.
Hein Schumacher, who takes over as chief executive of Unilever, will be given an annual salary of 1.8m euros (£1.6m) excluding bonuses. Photo: Unilever/Reuters
Nearly 60% of shareholders rebelled against the company's remuneration report. following the advice of ISS and Glass Lewis, two of the city's most prominent councilors, to vote no.
Glass Lewis said he had “serious doubts” about backing the payroll report as the new Unilever CEO's fixed salary “significantly exceeds both his predecessor and colleagues.”
Hein Schumacher, who takes over as chief executive in July was to be awarded an annual salary of €1.8m (£1.6m) excluding bonuses. The payroll report recommended that current boss Alan Jope receive a fixed salary of €1.6 million.
Among the FCA's proposed reforms to make the city more attractive, mandatory shareholder voting on major transactions will be eliminated and eligibility rules requiring a three-year financial track record as a condition for listing will be eliminated.
The proposed revision comes after the number of listed companies in the UK has fallen by 40% since 2008, when a number of companies, including British tech pioneer Arm, recently abandoned the London Stock Exchange in favor of the New York Stock Exchange.
The Center for Policy Research, a conservative think tank, said these measures would not provide the silver bullet needed to boost the London stock market.
It added: “It is important to look at the financial ecosystem as a whole , drawing attention to the growth of the UK and the scarcity of patient capital, as well as broader cultural issues in the UK such as our attitudes towards executive pay and risk.”
Flutter, owner of Paddy Power and Sky Bet, said on Wednesday it will continue with plans to move its listing to the US despite the FCA reforms.
Peter Jackson, Flutter's chief executive officer, insisted that the decision to the launch of a secondary listing in the US later this year “will not affect investment in the UK.”
Speaking hours after the government announced reforms to remove red tape around UK listed companies, Mr. Mr. Jackson said: “Acquiring a US listing will allow us to change our main listing later.”
“It's about pull factors. Nearly 60% of our global sports stakes are now made in the Americas.”
CRH, an FTSE 100 building materials company, has also announced its intention to relocate to the US. Ferguson, the premier water company formerly known as Wolseley, crossed the Atlantic Ocean last year.
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