UK Investors Call for Executive Pay Restraint

Amid a worsening cost of living crisis, the UK’s Investment Association’s (IA) has requested that “additional restraint is shown” over executive salary increases. The body’s annual pay guidelines for FTSE companies outline investor expectations regarding executive pay in the 2023 AGM season. Companies’ boards will need to “carefully navigate this period of significantly higher inflation and economic uncertainty when judging 2022 pay outcomes and setting executive pay for 2023 to ensure the long-term success of their companies”. The impact of the cost of living crisis on lower paid employees, “vulnerable” customers and suppliers are stressed by the association. Its report highlights the “retention and motivation” of employees below the executive level and the impact of board decisions on pay distribution as key for productivity. Andrew Ninian, the IA’s Director for Stewardship and Corporate Governance, said: “While we know from our discussions with companies that many are targeting salary increases to lower paid employees, it is imperative that all companies carefully consider how they award pay to promote the long-term success of the business.” 

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