Three recent news items, likely to bring about changes to the structure of executive pay, herald a busy time for remuneration committees

April 25, 2024

Three recent news items add spice to the ever-present debate about executive pay. In no particular order, Bloomberg notes that UK bankers’ pay is closing in on US-style packages, the US Federal Trade Commission has announced that employee non-compete clauses are to be banned in the US from August and the FT has reported that businesses have more confidence in the UK economy, which is growing faster than forecast.

There has been speculation about the impact on bankers’ pay since the cap on their bonus payments was removed about six months ago. In the upcoming AGM season, shareholders will be asked to approve resolutions to amend bankers’ pay structures. Interestingly, ISS and Glass Lewis are reported to be supportive of the proposals. Not to be left behind, shareholders in FTSE100 companies other than banks will be asked also to approve enhanced incentive levels for executives. All of this is consistent with moves to improve the competitiveness and attractiveness of the UK capital markets, driven by the London Stock Exchange among others and the proposition that increased executive pay is a key factor for improving competitiveness. It is, of course, but there are others. However, they are not directly relevant to this article.

The US ban on employee non-compete clauses is interesting. Historically, developments affecting executive pay across the pond find their way to the UK eventually. As economies continue to improve, the absence of non-compete restrictions will make it easier to change jobs.

This month’s faster than forecast growth in the UK economy has been driven by the services sector. Manufacturing by contrast has seen a downturn. A score of more than 50 in the UK composite output index indicates economic expansion. In April the index increased to 54. Higher wages, falling inflation and low unemployment are credited with a rise in consumer spending.

The above trio of unrelated developments may affect executive remuneration policies, possibly, in some unintended ways:


  • Banks that increased fixed pay to address the bonus cap might now find it difficult to reduce base salaries as a quid pro quo for higher variable pay.


  • Higher pay levels in the financial services sector might attract top executives from other sectors, causing their employers to take action to retain key executive talent.


  • If the UK were to follow the US and ban non-compete clauses, the job market will become more active. Employers are likely to react by adapting remuneration policies to retain management talent and focus on long-term pay.


  • If economic growth continues to be driven by the service sector, manufacturing might begin to experience a talent drain. That said, economies move in cycles. What goes round comes around (service companies have themselves suffered recently as costs have risen and markets have stalled) but in the meantime there may be job losses and pressure on pay.

Whether meeting the challenges of corporate governance reform (of which there will be more this year) seeking shareholder’ approval for new, possibly atypical in the UK, remuneration policies or designing pay required increasingly to be competitive in an international context, remuneration committees are facing a busy period. Executive pay is going multi-national.

MM&K is an independent, full-service adviser on executive remuneration, performance and governance. Together with our partners around the world, we are supporting companies and their remuneration committees as they look to and beyond the horizon for experienced boardroom talent and the means to keep it.

For more information about points raised in this article or about MM&K’s services, please contact

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