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Luke Hildyard, Head of Research at the High Pay Centre, discusses why executive pay should matter to investors. He presents the direct business case that high pay ratios can demoralize employees, lead to increased conflict and costs, and ultimately diminish productivity. Additionally, he highlights how excessive pay attracts the wrong talent, fostering a culture of poor decision-making and underperformance. The presentation also addresses the indirect implications of executive compensation on economic inequality and business culture, emphasizing the need for fairness and proportionality in compensation structures.
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Luke HildyardHead of Research, High Pay CentrePresentation to AMNT: Why executive pay should matter to investors www.highpaycentre.org www.twitter.com/highpaycentre www.highpaycentre.org
The direct business case • High pay ratios demoralise employee base – more conflict, more costs, less productivity • Massive pay attracts the wrong people – creates false sense of invincibility • Lavish pay policies lead to poor performance, poor decisions, poor value for shareholders www.highpaycentre.org
The indirect business case vs • Exec pay sets benchmark for top pay for top managers across the economy • Inequality resulting from excess exec pay creates major social and economic problems • Business culture based on huge inequality is not sustainable www.highpaycentre.org
Fairness and Proportionality • Wealth is created collectively – efforts of the entire workforce & wider economic context • The talent myth – no international market for CEOs; internal hires perform better • Market failure – FTSE 100 CEO earns more in a year than a surgeon in a lifetime www.highpaycentre.org
