GlaxoSmithKline is one of four FTSE 100 companies that will not publish a breakdown of how much more their CEOs earn than the average worker.  Picture: REUTERS
GlaxoSmithKline is one of four FTSE 100 companies that will not publish a breakdown of how much more their CEOs earn than the average worker. Picture: REUTERS

London — Some of Britain’s biggest companies are bucking calls to reveal more data about executive pay, risking a fresh rift with major investors who are urging the government to combat ballooning wage inequality.

Four of the 16 FTSE 100 companies that responded to a Bloomberg survey — GlaxoSmithKline, AstraZeneca, Aviva and Anglo American — said they would not publish a breakdown of how much more their CEOs earn than the average worker, a measure backed by the Investment Association, whose members hold about a third of the stock represented in the benchmark index.

While advocates say forcing companies to report pay ratios would help restore trust in big business at a time of record wealth divisions and rising anti-globalisation sentiment, critics argue the metric is a misleading indicator for multinationals with workers all over the world.

A FTSE 100 boss earned 128 times more than the average employee in 2015, up from 47 in 1998, as CEO pay jumped from about £1m a year to £4.3m, data compiled by the government show.

Prime Minister Theresa May decried the widening pay gap as "unhealthy" and "irrational" before submitting a so-called green paper on corporate governance reform in November. That document gives interested parties until Friday to offer recommendations to legislators who are charged with drafting new measures.

Dodd-Frank Review

While the pay-ratio debate is just getting started in the UK, the issue has been hotly contested in the US since the rule was included in the Dodd-Frank Act that former US president Barack Obama signed in 2010.

The measure came into effect in 2017, but implementation was delayed after President Donald Trump signed an executive order mandating a sweeping review of Dodd-Frank.

While the pay-ratio debate is just getting started in the UK, the issue has been hotly contested in the US since the rule was included in the Dodd-Frank Act that former US president Barack Obama signed in 2010

Leading Republicans in Congress and business lobbyists have assailed the regulation, arguing that it requires companies to disclose information that is not necessary for making investment decisions. Heads of companies in the S&P 500 enjoy pay ratios and total compensation that are more than double their counterparts in the FTSE 100, according to data compiled by the AFL-CIO, the largest US federation of trade unions.

Tom Gosling, a partner at PricewaterhouseCoopers in London, said he had submitted arguments against imposing the rule in part because it did not capture how the role of the CEO has grown over time.

He said wage disparity was a problem that needed to be tackled, but better ways to do it included requiring firms to disclose data showing how CEO compensation moved relative to employee wages over time.

"Pay ratios have the potential to be at best misleading and at worst, positively damaging,"
he said.

Bloomberg

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