Amid a growing debate over attitudes towards pay in Britain and the wider health of the UK’s capital markets, Schroders, Britain’s largest asset manager, is urging for increased executive pay. Highlighting a significant disparity between the pay of UK and US company leaders, Schroders warns top talent may be driven from Britain to America.
Analysis of the pay packages of 2,353 chief executives in both countries by the investment group that was published in the Times, found that UK bosses were paid, on average, just one-fifth of the remuneration of their American counterparts. Even when company sizes are considered, CEOs in the US are paid more than twice the amount of those in Britain.
Writing in the Times, Kimberley Lewis, head of active ownership at Schroders, speaks of the potential issues such large executive pay disparity could have on Britain’s corporate sector, namely that the allure of a more dynamic corporate landscape in the US, together with higher pay, could mean skilled executives leave Britain. Lewis advocates for higher compensation for executives in Britain to create a more level playing field with America, and retain top talent, particularly in global sectors.
Concerning complaints about excessive pay, Lewis argues that there needs to be a balance struck. “We want to see a strong link between shareholder returns and CEO pay. But we also believe that in many cases, especially where the firm is global or operating in a highly competitive global sector, there is a case to pay more to achieve global alignment,” she writes.
Schroders is the latest high-profile company to enter the debate about pay in Britain and the current condition of the nation’s capital markets. Since 2021, London has seen a drop in company flotations, with several leading public companies opting to list in New York instead. Such trends have sparked concern that the City of London is losing its appeal compared to other global markets.
In response, a series of reforms, including major changes to listing rules, have been proposed, aimed at enhancing the attractiveness of London. In 2023, Dame Julia Hoggett, CEO of the London Stock Exchange called for a “constructive discussion” on the remuneration, arguing that unequal pay is an often-overlooked issue for companies in the UK.