Bosses urged to share pain over pandemic
James Sullivan-Tailyour of Pinsent Masons said remuneration committees should not be looking to protect executives’ pay at the same time as they are laying off staff or cutting salaries.
“Investors are also unlikely to be sympathetic if companies come to them later in the year for fresh capital, or if the dividend is cut, while executives continue to make substantial sums in share awards and bonuses,” he warned.
His comments came after The Investment Association (IA), which represents institutional investors, issued guidance on how it expects listed companies to respond to the pandemic.
The IA said there was a risk of “significant reputational ramifications” if directors’ pay was out of step in businesses which had engaged in redundancy programmes, made use of taxpayer-funded support schemes, sought to raise additional capital from shareholders or cancelled dividends.
Pinsent Masons legal director Fleur Benns also said that while the guidance was aimed at companies listed on the main market, the main principles would be equally relevant to those listed on AIM and larger private companies.
She said: “it is clear that companies that have suspended or cancelled dividend payments or relied on government support as part of their Covid-19 response will need to ensure that this is reflected in their executive remuneration.”
A message from the Editor:
Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.
With the coronavirus lockdown having a major impact on many of our advertisers - and consequently the revenue we receive - we are more reliant than ever on you taking out a digital subscription.
Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. With a digital subscription, you can read more than 5 articles, see fewer ads, enjoy faster load times, and get access to exclusive newsletters and content. Visit https://www.scotsman.com/subscriptions now to sign up.
Our journalism costs money and we rely on advertising, print and digital revenues to help to support them. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.
Want to join the conversation? Please or to comment on this article.