Radical reform needed on top pay, says guru

a ‘ SoFTlY SoFTlY’ approach to curbing executive pay has not worked and the system needs a radical overhaul, one of the UK’s leading governance gurus has told the daily Mail.

Guy Jubb is one of the most respected voices in the City on the topic of pay, having spent 20 years as global head of governance and stewardship at Standard life Investments.

He is now an honorary professor at the Edinburgh Business School.

He told the Mail a ‘list of Shame’ brought in by Theresa May for companies where there was a pay revolt of more than a fifth of investors ‘doesn’t seem to be having the desired effect’ based on reports he has seen – and that in some cases being on it was taken as a ‘badge of honour’.

Jubb wants sweeping reforms including a change to voting rules so that pay resolutions require a ‘ super- majority’ of 75pc, rather than 50pc as at present.

‘By having a super-majority requirement, pay committees will be much more sensitive to the views of shareholders,’ he said. ‘This should strengthen their hand in negotiating with management.’

He said that while some City investors do take an active interest in executive pay and use their votes, others need to raise their game. and he demanded more transparency about the discussions between investors and pay committees, which he says are ‘shrouded in secrecy’. an account of these should be published in annual reports and be reviewed by the auditors. Investors who fail to respond to requests to consult should be ‘named and shamed’, he added.

a report on FTSE 100 chief executive pay by the High Pay Centre last week found that rewards fell 13 per cent last year, but that it would still take the average worker 117 years to earn a top boss’s annual package.

anger among shareholders and the public has been fuelled by outsized awards, including a payout that could have exceeded £100m to Jeff Fairburn, the former chief executive of Persimmon. Profits at the housebuilder were inflated by the taxpayer-backed Help to Buy scheme and Fairburn was ousted this year following protests by investors, including Standard life,

‘The public interest in executive pay, and the social as well as corporate issues it generates, is undeniable. It has the potential to lead to significant unrest,’ said Jubb.

‘The softly- softly approach to addressing the root causes has consistently failed to resolve the problems of excess, largesse and the gulf between top pay and the rest of us.’

He added: ‘ Indeed I am inclined to think it may have made the problems worse. The status quo must not be allowed to continue.’