Executive Pay Battles Heat Up for FTSE 100 Firms

April 15, 2024

FTSE 100 companies are gearing up for intense battles over executive pay in the coming weeks, facing resistance from proxy advisers on proposed compensation packages. London Stock Exchange Group is proposing to nearly double chief executive David Schwimmer’s pay to £13.2 million from £6.3 million. 

However, proxy adviser Glass Lewis has recommended shareholders vote against this increase at the upcoming annual general meeting on 25 April.

Similarly, medical manufacturer Smith & Nephew is encountering opposition from the influential advisory group Institutional Shareholder Services (ISS) regarding the pay packet for chief executive Deepak Nath. ISS has advised shareholders to reject Nath’s proposed pay rise of 30% to a maximum of $11.79 million next year, citing the increase as “excessive.”

These clashes reflect the ongoing tug-of-war over executive compensation in London, with industry voices advocating for higher pay to attract top talent and remain competitive globally. Capital markets expert Mark Austin emphasized the need for London-listed companies to offer competitive compensation to vie for talent on an international scale, urging a response to recommendations from proxy agencies that may hinder these efforts.

The debate over executive remuneration intensified following recent shareholder votes at Abrdn and AstraZeneca. AstraZeneca faced shareholder dissent, with around 35% voting against a payout increase for chief executive Pascal Soriot, who could see his maximum pay rise to £18.7 million. This dissent prompted a strong reaction from the firm’s chair, who criticized proxy advisers for perceived “double standards” in executive pay scrutiny.

London Stock Exchange chief Julia Hoggett highlighted concerns last year, warning that London risks falling behind the US in attracting top talent due to constraints imposed by proxy advisers and asset managers on executive pay policies, even when they are below global benchmarks. The upcoming proxy battles underscore the ongoing debate over executive compensation within the City.