Britain is being held back by a campaign against high pay, the head of the London Stock Exchange has warned.
Julia Hoggett said a pay disparity between UK chief executives versus their US counterparts had “not received enough attention” and called for a level playing field to stem an exodus of companies from the Square Mile.
Her comments yesterday came just hours after the Financial Conduct Authority said it would slash red tape and shake-up London’s listing rules in an effort to reinvigorate the stock market.
In a statement on the LSE’s website, Ms Hoggett called for a “constructive discussion” on how Britain approached executive pay.
She said: “We should be encouraging and supporting UK companies to compete for talent on a global basis, so we remain an attractive place for companies to base themselves, stay and grow.
“The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it.”
More lucrative in US
The Telegraph says boardroom pay has long been more lucrative in the US compared with the UK where more restraint is typically advocated.
Mark Freebairn of City headhunter Odgers Berndtson, said US companies typically paid around 10 times more than for the same job in the UK.
He added: “This limits the ability of UK firms to persuade credible candidates to the UK and inhibits the retention of international talent.”
Ms Hoggett criticised the decision of some shareholders and proxy advisers to vote against executive pay policies in Britain “even when those pay levels are significantly below global benchmarks”.
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.”
On Wednesday, shareholders rejected Unilever's pay report after proxy advisers said its new chief executive’s salary was excessive.
Remuneration report
Nearly 60% of shareholders rebelled against the company’s remuneration report following recommendations from ISS and Glass Lewis, two of the City’s most prominent shareholder advisers, to vote against it.
Glass Lewis said it had “severe reservations” about supporting the pay report as Unilever’s incoming chief executive’s fixed pay “significantly exceeds both their predecessor's and peers”.
Hein Schumacher, who will take over as chief executive in July, was set to be handed an annual salary of £1.6million before bonuses.
Flutter, the owner of Paddy Power and Sky Bet, said on Wednesday it will forge ahead with plans to move its listing to the US despite the FCA reforms.
Peter Jackson, chief executive of Flutter, insisted the decision to launch a secondary listing in the US later this year would have “no bearing on investment in the UK”.
Speaking hours after the Government announced reforms to cut red tape around firms listing in the UK, Mr Jackson said: “Acquiring a US listing would enable us to switch our primary listing at a later date.
Pull factors
“It’s about the pull factors. Nearly 60% of our global stakes in sports are now done in America.”
FTSE 100
The UK's top share index, the FTSE 100, was up/down XXX points at XXXX shortly after opening this morning, following yesterday's 15-point gain.
Brent crude futures were 1.35% higher at $73.31 a barrel.
Companies reporting today
- Q1 results: Anheuser-Busch Inbev, Shell
- Trading update: BAE Systems, Next