The High Pay Commission (HPC) has today published its final report, “Cheques With Balances: why tackling high pay is in the national interest” (the Report). The HPC was established by the pressure group Compass (“Direction for the Democratic Left”) with the support of the Joseph Rowntree Charitable Trust. The HPC describes itself as “an independent inquiry into high pay and boardroom pay across the public and private sectors in the UK”. The background of the HPC Commissioners can be seen here and the HPC “Expert Panel” is here.
Perhaps the most eye-catching of the HPC recommendations is its call for “all companies to publish an anonymised list of their top ten highest paid employees outside the boardroom”. In the Report, this recommendation is restricted to companies that “comply or explain” with the UK Corporate Governance Code (the Code) – that is, to companies with a Premium Listing within the UKLA Listing Regime.
One little-reported finding of the HPC is that there appears to be little statistical evidence to support the argument that top executive pay must be escalate to stop talent from being poached:
“Our own evidence shows that global mobility is limited, with only one successful FTSE 100 chief executive officer poached in five years – and even this person was poached by a British company.”
An ambiguity throughout the Report is the extent to which the recommendations apply to AIM companies. Several recommendations are predicated on compliance with the Code, which is not an AIM requirement (most AIM companies tending instead to follow the Quoted Companies Alliance Corporate Governance Guidelines for Smaller Companies). It is fair to say that the Report has been written principally with FTSE 100 companies, or the FTSE 350 universe, in mind – AIM companies do not appear to have been on the HPC’s radar.
The HPC Recommendations