Fair pay for fair work
From a report by St Pauls Institute
In May 2018, in conjunction with Friends Provident, St Pauls Institute published a report, 'Fair pay for fair work: a look at executive compensation'.
Companies form an organic part of society. The shared bargain between companies and society needs to be re-established so that the required basis for mutual trust can exist. They need to balance justice and self-interest in a way that society perceives as fair, as well as having a desire to put the common good ahead of self-interest.
With mandatory reporting of executive pay ratios expected to become law soon, this report makes recommendations to build on this improved disclosure to see action regarding the lowest paid, and to see integration of decision making on executive pay and average employee pay rather than the disconnect so evident today.
It makes five key recommendations for companies:
Implement the publication of a pay ratio between the executive and the median staff pay as proposed by the government
Simplify pay packages, and rein in stock-based pay
Increase the pay of those paid least
Publish interior salary multiples, sometimes known as ‘next layer multiples’
Build and publish a fair compensation framework
Importantly, there are three recommendations for how investors can support:
Create an investor group to influence executive compensation
Act on Remuneration Committees
Tackle the web of vested interests
Write to the CEO (a sample letter is included).
Friends Provident will be using their investor networks to encourage collective engagement based on these recommendations.
The full report is here.
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