Paul Arathoon writes for City AM on rising executive pay at large listed companies
The recent moves by some of the FTSE 100’s largest companies, such as British American Tobacco and Compass Group, to enhance their chief executives' pay packages to look more like US CEO arrangements have reignited the debate on executive compensation in the UK.
This trend, which has been encouraged by the London Stock Exchange Group and Smith & Nephew’s recent successful executive pay adjustments, raises important questions about the future of UK business competitiveness and the dynamics between companies and their shareholders.
Paul Arathoon, Partner in our Corporate team, argues in an opinion piece for City AM that increasing executive pay is unlikely to be a silver bullet for increasing the competitiveness of the UK's capital markets.
"Whilst competitive pay is undoubtedly a factor in attracting and retaining talent, it is rarely the sole, or even a major, determinant of a company’s decision to list in a particular market", he writes.
Other factors, such as the overall regulatory environment, market depth and liquidity, and investor base, arguably play more significant roles. The UK must address these broader issues to create a more conducive environment for listings. For instance, simplifying regulatory processes (which recent changes to the UK Listing Rules, together with anticipated changes to the prospectus regime, are starting to do) and enhancing market infrastructure will likely have more impact in the long term than merely adjusting pay scales.
Read the full article in City AM here.
