UK executives should be paid more if the country wants to retain talent and deter companies from leaving the City of London, the head of the London Stock Exchange has said.
Julia Hoggett said the UK needed a “constructive discussion” on the UK’s approach to executive pay as part of broader efforts to boost the attractiveness of London’s capital markets.
“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 chief executive said in a statement on Wednesday on the LSE website.
“The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it.”
Her comments come as companies flee London’s stock exchange, where the number of listed companies has fallen 40 per cent since 2008, and as the UK’s financial regulator pushes for an overhaul of stock market listing rules.
“If the UK capital markets community chooses to remain on the current path, the consequences of that decision should be explicitly recognised and accepted,” she said.
In recent years, medical devices company Smith & Nephew has discussed moving its listing to the US, partly to escape the UK’s stricter attitude towards executive pay. This ultimately led to the departure of its chief executive Namal Nawana in 2019.
Hoggett criticised asset managers and proxy advisers and their votes against the executive pay policies of UK companies, which can often be “significantly below global benchmarks”, meaning in her view the UK is not on a “level playing field”.
“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,” she added.
The LSE wants to bring together the chairs of listed companies, founders of private companies, asset managers, the Financial Reporting Council, the Investment Association and proxy agencies for talks.
Sébastien de Montessus, of Endeavour Mining, was the best-paid chief executive in the FTSE 100 in 2021, earning £16.85mn, according to research last year by the High Pay Centre and TUC research.
Meanwhile, the highest-paid boss of an S&P 500 company in 2021 was Expedia Group’s Peter Maxwell Kern, whose total adjusted pay added up to $296.2mn, according to S&P Global Market Intelligence.