Boardroom pay row ‘massively damaging’ for British business
EXCESSIVE boardroom pay has been “massively damaging” to the image of British business and so the “shareholder spring” investor revolts against bloated remuneration were a necessary counter-blast, the director-general of the CBI employers’ lobby group has claimed.
John Cridland said that the vast majority of companies acted responsibly on pay, but high-profile controversy about corporate rewards had tarred many firms unfairly with the same brush in the public’s eyes.
Cridland, who will give the keynote speech to CBI Scotland’s annual dinner in Glasgow on Thursday, said the issue had become “very frustrating” to the thousands of businesses “who pay themselves what they can afford and what the shareholders find acceptable”.
He added: “It’s been massively damaging to business. There are a relatively-small number of examples of excess remuneration that influence the public attitude to what we are all doing.
“The shareholder spring moved on into the shareholder summer. Institutional investors said that, where the examples are too extreme, they won’t put up with it any longer.
“It’s been uncomfortable for businesses but it was necessary. We are not in the business of defending the indefensible. The owners of these companies are often the like of pension schemes.”
The shareholder spring rocked boardrooms as investors hit back at huge salaries and bonuses that were deemed wildly inappropriate amid falling profits, share prices and lacklustre dividends.
Barclays – now enmeshed in at least three regulatory probes and with a new chief executive, Antony Jenkins, appointed last week – was stunned when nearly a third of shareholder votes failed to back its pay awards.
Insurance giant Aviva’s chief executive, Andrew Moss, was forced out after more than half of shareholder votes refused to support the company’s remuneration report.
AstraZeneca chief executive David Brennan announced in June that he would step down after a profits warnings, while Trinity Mirror boss Sly Bailey quit amid a furore over the media group’s executive pay and battered share price.
Elsewhere, more than 30 per cent of shareholder votes failed to support the Hovis-to-Mr Kipling owner Premier Foods’s pay report.
Banks have been foremost in the firing line on boardroom largesse, with heads of partly taxpayer-owned banks Royal Bank of Scotland and Lloyds, Stephen Hester and Antonio Horta-Osorio respectively, declining to take their bonuses last year.
However, Cridland said he was “in no sense a hired gun for the banks” even though all the main high street players are members of the CBI, which represents 240,000 UK businesses. He said: “The majority of businesses in the CBI are users of banks rather than banks. It’s the users who speak up loudly.”
Separately, the CBI boss is set to claim at CBI Scotland’s dinner this week that, even though the final decision on Scottish independence rightly rests with the voters, the business lobby group believes that the economic case for separation from Britain “has not been made”.
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