Fat-cat pay row intensifies after bosses back US brain drain claim

The row over fat-cat pay has escalated with leading City figures claiming that chief executives should be paid more to avoid a talent exodus.

UK’s senior fund managers backed London Stock Exchange head Julia Hoggett, who last week said that, without a rise, bosses may leave for the US.

Peter Harrison, chief executive of the UK’s largest asset manager Schroders, said: ‘This is a question that broader society needs to answer – which is more important: limiting the gap between CEO and worker pay or accepting that boards need the freedom to attract the best CEOs for the best long-term outcomes,’ he told the Financial Times.

John Ions, chief executive of Liontrust, said the US has a culture ‘where if you do a good job and deliver for shareholders, you are rewarded’ whereas in the UK ‘there’s criticism’. 

Both cite the rising number of FTSE 100 bosses who have left or are planning to leave for jobs in the US.

But their comments run counter to recent shareholder revolts over bosses’ pay packets, including at Unilever and Pearson. 

Luke Hildyard, director of the High Pay Centre, a UK think tank focused on pay and employment rights, said: ‘These comments only make sense if you think that when businesses succeed it’s all down to the bosses.

‘A better way to ensure good executive leadership is to get companies using their multi-billion pound budgets to train more potential senior managers’.