RUTH SUNDERLAND: Bring out the tiny violins for company bosses (2024)

London, despite the doom-mongering that surrounds the stock market, is still a magnet for some of the best companies and business talent.

The FTSE 100 is an international index. Many blue-chips have substantial sales and operations overseas; in some cases, their UK presence is tiny. A large number of London-listed firms have CEOs that hail from overseas.

All of this is excellent but it does complicate the debate on executive pay.

In recent weeks, a number of CEOs, via their cheerleaders, have been agitating for more money, believing themselves to be underpaid by US standards.

They are holding investors to ransom with the implicit or explicit threat that, as fully fledged members of the global elite, they will walk if their demands are not met.

The argument now is that Britain undervalues not only individual bosses, but also companies. Whether or not the UK has a grudging and negative business culture is open to debate, but it is a popular view in elite circles and is being weaponised in an effort to hike top pay.

Hence the claim, made by one of AstraZeneca's biggest shareholders, that the drug company's chief executive Pascal Soriot is not merely underpaid, but 'massively' so. True, the French-Australian Soriot made only £17m last year, which is less than the £21m that rival David Ricks notched up at US drugs giant Eli Lilly.

Also true: he has overseen excellent share price performance, staved off what would have been a dreadful takeover by Pfizer, and delivered a Covid vaccine. But most people's reaction would probably be: bring out the tiny violins.

There seems to be no consciousness of how absurd most patients, or lower paid health professionals, would find it to describe Soriot as hard-done-by.

As The Mail on Sunday reported, he is in line to make £150m over his career at the pharma company.

A sizeable number of shareholders seem to have had similar feelings.

Some 36 per cent voted against proposals to raise Soriot's rewards – enough to put Astra on the official 'List of Shame' where more than 20 per cent of investors object to top pay.

A similar row is brewing at the London Stock Exchange Group, where the CEO David Schwimmer, a New Yorker, wants a hefty pay rise. He thinks he should be rewarded on a par with the bosses of big US data groups.

Rupert Soames, the chairman of medical devices maker Smith & Nephew, is running around trying to persuade shareholders to back a big increase for his CEO, Deepak Nath. The argument is that more money is needed to stop Nath, who is based in Texas, following a string of previous S&N chiefs out of the door.

A whole industry has grown up to devise and justify mind-blowingly complex executive rewards. But most people couldn't give a fig.

What they see is a bunch of entitled individuals who already earn fabulous sums jostling for even more obscene amounts.

Bosses' pay should be set by the market for top executives, not according to some subjective view among the general public on how much an individual 'deserves', compared with, say, a nurse.

But no market exists in a social and moral vacuum. The clamour for using US-style pay to hang on to some undeniably brilliant executives should be weighed up against the possible damage to trust among other constituencies.

Ignoring the views of customers, employees, investors – and in the case of big pharma, patients – is rarely a good look.