By Dina Medland in London
There has been no shortage of headlines screaming of shareholder and stakeholder concern around levels of executive pay at publicly listed businesses. This concern has also been reflected in the UK Government’s consultation on corporate governance reform, and the report from the Parliamentary Select Committee, just out.
An excellent demonstration of the results of such pressure came yesterday, when BP said it had cut CEO Bob Dudley's 2016 pay package by 40% to $11.6 million. The FTSE 100 company has also introduced changes that will lower executives' performance incentives. Around 60% of shareholders opposed BP's pay policy at last year's AGM.
"We applaud the BP remuneration committee for being proactive in responding to the shareholder revolt last year and see this as a milestone in the engagement between companies and shareholders," said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, according to a Reuters report.
“Even after a cut of nearly $8 million, Dudley's pay remains well above that of rival European oil companies”, said Reuters.
Advertising, Social Media and Diversity
Pepsi, the fizzy drinks business, spent $2.5bn on advertising in 2016, according to the Financial Times. It is not clear how much it spent on a recent online advertisement featuring the model Kendall Jenner, but severe backlash on social media following the ad’s airing caused it to be pulled swiftly. The detail is here, in a report by the American NBC News.
The company issued a statement when it pulled the ad: "Pepsi was trying to project a global message of unity, peace and understanding. Clearly we missed the mark, and we apologise. We did not intend to make light of any serious issue. We are removing the content and halting any further rollout. We also apologise for putting Kendall Jenner in this position" it said.
The question is: who, at the most senior levels, approved the advertisement at Pepsi – and how diverse was that grouping in every sense, particularly race and ethnicity? Because it seems unlikely that anyone with any knowledge current affairs, the Black Lives Matter campaign and an iota of sensitivity and empathy could ever have thought the advert was a good idea in the first place.
Ryanair 'will have to suspend UK flights' without early Brexit aviation deal said the headline on a story in The Guardian yesterday. Coming as it did not long before the Easter holidays and the summer ahead with minds turning to travel, it is likely to have concentrated minds on the reality of that deal.
The company warned it will have to halt flights from the UK for “weeks or months” if Theresa May does not seal an early bilateral Brexit deal on international aviation. Neil Sorahan, Ryan Air CFO, told the paper that the suspension of flights from Stansted and other airports was “a very distinct possibility.”
While Ryanair has a history of being particularly vocal in the media, its concerns about uncertainty are being reflected across many businesses and industries faced with the possibility of having to adjust their business models to allow for new realities.
Corporate Governance Reform
As businesses wrestle with the uncertainties of Brexit, there are likely to be costs.
New pressures placed on them were made clear yesterday in developments around the UK government’s agenda for corporate governance reform. The Parliamentary Select Committee’s report on corporate government reform now awaits the government’s response.
New legislation also came into force across the UK yesterday, aimed at addressing gender inequality in the workplace. All private and voluntary sector employers with 250 or more employees must now publish prescribed information about their gender pay gap results – they have 12 months to do so.
The UK is one of the first countries in the world to require gender pay gap reporting.