The chief executive of the London Stock Exchange has called for the heads of UK companies to be paid more to match their US counterparts.
Julia Hoggett argued that British companies found it difficult to attract and retain executives because they offered smaller salary packages than their US rivals.
The comments, in an article published on the LSE’s website on Wednesday, were criticized as “a bit misleading” by the High Pay Centre, a think tank that tracks chief executive pay, while the chairman of Congress of Trade Unions (TUC) said UK CEO pay should go down, not up.
Hoggett’s comments came hours after the UK’s financial regulator, the Financial Conduct Authority, announced a radical relaxation of rules on listing companies on British stock exchanges. Hoggett welcomed the changes, which could benefit the LSE by attracting more companies to London.
The FCA acknowledged that the reorganization would mean UK investors would face more risk because there would be fewer controls. However, Hoggett argued that the changes left out the “critical element” of executive pay.
Too often, companies are “hindered” by asset managers who vote “against executive pay policies, even when those pay levels are significantly below global benchmarks,” he wrote.
“Often the same representation agencies and asset managers who oppose UK compensation levels back much higher compensation packages in different jurisdictions, especially the US.
“This lack of a level playing field for UK businesses often goes undiscussed, or if it is discussed, the downside risks to our businesses, our economy and our competitiveness are not part of the conversation.”
Union leaders and some politicians have suggested that rising executive pay fuels perceptions of inequality, particularly among UK workers who have suffered real wage stagnation not seen for decades at a time of global crisis. cost of living.
Paul Nowak, the TUC general secretary, said the UK government should “clamp down” on high executive pay by introducing a maximum ratio for chief executive pay compared to average workers and forcing workers to join the boards.
He cited the rapid growth in financial services bonuses and executive compensation at energy companies in particular.
“CEO pay is booming, but workers are enduring the longest wage crunch in 200 years,” he said.
“It is a story of two Britons. Without urgent action, the cost of living crisis will further deepen inequality in this country. It’s time to keep wages at the top low, not everyone else’s wages.”
Luke Hildyard, director of the High Pay Centre, said: “The typical pay for a FTSE 100 chief executive last year was £3.4m, which seems like enough money to attract and retain ‘national and international talent’. ‘ described in the article.
“The UK is already one of the most unequal countries in Europe, with a fifth of total company revenue absorbed by the richest 1%, according to some estimates.
“The idea that paying billionaire executives even more is some kind of solution to stagnant living standards across the country seems a bit misleading.”
Rewards for British CEOs have skyrocketed relative to the rest of the population, and the ratio of bosses to workers has grown particularly in the two decades before the 2008 global financial crisis.
However, matching US pay levels would still represent significant progress for most UK executives. In 2021, chief executives of S&P 500 companies received, on average, $18.3m (£14.6m) in total compensation, according to data from the American Federation of Labor and the Congress of Industrial Organizations.
For that year, figures from the High Pay Center showed that FTSE 100 CEOs received £3.4m. The median total wage for a UK worker is around £33,000, according to the Office for National Statistics.
David Schwimmer, chief executive of the London Stock Exchange Group, which owns the LSE, received £4.7m in 2022, up from £6.8m the year before. He earned 40 times more than the average company worker, according to his latest annual report.
The London Stock Exchange plc, the company Hoggett has run since April 2021, reported that its highest-paid director for 2021 was paid £1.3m. The company said it could not share salary details for executives below the parent company’s board level.