Mark Kleinman: Boardroom pay battle, the mentoring boon and the football funding row
Sky News City Editor Mark Kleinman writes weekly for City A.M.
Boardroom pay debate creates election tightrope
Ahead of a general election that will be fought at least partly on a cost of living battleground, championing loftier boardroom pay is not an obvious vote-winning strategy.
Yet the number of conversations taking place on the subject between government officials and the private sector underlines a sense of anxiety that globally significant companies will struggle to take root in Britain without reforms to boost UK corporate competitiveness.
In a stuttering economy and against a lacklustre stock market backdrop, FTSE 100 CEOs don’t seem to be doing too badly. Recent figures published by the High Pay Centre show that the median pay of bosses in London’s blue-chip share index rose from £3.38m in 2021 to £3.91m last year.
Not bad – especially when Andrew Bailey, the Bank of England governor, has been urging companies all year to show wage restraint.
Yet Julia Hoggett, CEO of the London Stock Exchange, is entitled to warn that pay disparities between British and US-listed company bosses need to be addressed.
“Attracting and retaining domestic and international talent to create that value is something that UK-listed company boards and their executive leadership teams strive to do every day,” she wrote in the summer.
“And yet, very often, this talent objective is hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies even when those pay levels are significantly below global benchmarks.
The LSE’s challenges are more diverse than the single issue of executive compensation
“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.”
Hoggett is correct – which is why, as I can reveal today, a number of the City’s top fund managers are preparing to press proxy advisers to overhaul the way they benchmark executive pay in the FTSE 100 index. They want global companies in the UK, such as Shell, Unilever and Vodafone, to be compared to international peers rather than solely domestic rivals.
This, they believe, would contextualise British company bosses’ remuneration more appropriately, trigger fewer pay revolts and in turn make the London market more attractive to world-class executives.
The LSE’s challenges are far more diverse than the single issue of executive compensation, of course. And the BoE’s Bailey is unlikely to be pleased. But some progress with the proxy agencies might at least start diminishing the growing impression that the London market is to be avoided at all costs.
Mentoring deal a boon in the age of corporate complexity
Who’d be a FTSE 100 chair? Managing errant CEOs, the threat of activists and ever-more complex geopolitical developments have made the roles more demanding than ever.
Happily for those involved in the boardroom mentoring business, this cocktail of corporate challenges is paying dividends.
I hear that Global Mentors Group, backed by MW&L, has snapped up the Board Advisory Partnership, which specialises in assisting first-time company chairs to cope with the requirements of the role.
The deal, which will be announced today, adds it to GMG’s existing operations, CMi and Merryck, while Kate Donaghy, BAP’s founder, will remain in place.
Sir Roger Carr, the former BAE Systems chairman, said in his capacity as GMG chair that BAP had “established itself as a very important part of the jigsaw that contributes to the success of a chair and the board that he or she leads”.
A relatively inconspicuous area of the professional services industry it may be, but many boardroom figures I speak to acknowledge that mentoring services are now an increasingly important part of their advisory line-up.
Football funding row drags into injury time
What price a new deal for the national game? For more than a year, the Premier League and English Football League have been engaged in tense discussions about a model for redistributing the sport’s broadcasting income.
Yet like the new rules which have added interminable injury-time to many top-flight matches, the final whistle seems as distant as ever.
Political stakeholders have, somewhat predictably, sided with the minnows of the EFL, casting the Premier League as the bullying behemoth responsible for dragging its heels.
Yet many sources portray a rather different picture, suggesting that the shifting position of Rick Parry, the EFL chairman, has been largely responsible for a hiatus which has profound implications for the entire professional pyramid as an independent regulator looms.
A new blueprint proposing the issuance of bespoke licences to all 92 Premier League and EFL clubs threatens chaos and financial pain for all. The additional cost, implications for sporting integrity and bureaucratic mess that such a system would entail is madness. It should be scrapped and rethought.
Then there is the elephantine question confronting 20 top-flight club-owners – particularly the wealthiest among them. Why commit to an agreement that would transfer £915m over six years from their pockets into those of EFL counterparts with few assurances of how that money will be spent? And why do so without guarantees that the new IREF – Independent Regulator for English Football – will not deliver a significant incremental financial burden?
Resolving the conundrum of how that £915m would be funded looks tough, too. Given IREF’s shambolic gestation so far, this is yet another regulatory blueprint that risks doing more harm than good to those it is intended to protect. What an own goal that would be for one of Britain’s most significant cultural exports.