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Labour’s Jeremy Corbyn speaks out on executive pay

Jeremy Corbyn, leader of the UK’s opposition Labour Party has outlined his party’s agenda for governance reform focusing on CEO pay ratios. In a speech in Peterborough last week (10th January) Corbyn added his voice to the current debate surrounding Theresa May’s governance green paper proposals.

Billed as a new year message about what Labour would be arguing for in 2017 – and seen as an opportunity by the media to relaunch his leadership – Corbyn’s speech argued the case for more income equality and focused on the gap in pay between those at the top and other workers.  However his support for a maximum pay cap in a radio interview appeared to drown out the proposed package of reforms.

He said: “What we cannot accept is a society in which a few earn the in two and a bit days, what a nurse, a shop worker, a teacher do in a year. That cannot be right.

Labour leader speaks out on executive pay

We cannot have the CEO paying less tax than the cleaner and pretending they are worth thousands times more than the lowest paid staff.

Corbyn said that a Labour government would extend the scheme adopted by David Cameron when he was prime minister. Cameron had proposed a 20:1 pay ratio to limit sky-high pay in the public sector and currently all salaries higher than £150,000 must be signed off by the Cabinet Office. Corbyn said Labour would extend this to any company that is awarded a government contract.

A 20:1 ratio means someone earning the living wage, just over £16,000 a year, would permit an executive to be earning nearly £350,000. It cannot be right that if companies are getting public money that that can be creamed off by a few at the top.

Other options that Corbyn suggested for addressing executive pay were:

  • A government-backed kitemark for those companies that have agreed pay ratios between the pay of the highest and lowest earners with a recognised trade union which, Corbyn suggested would allow consumers to judge for companies themselves
  • Executive pay to be signed off by remuneration committees on which workers have a majority
  • Ensuring higher earners pay their fair share by introducing a higher rate of income tax on the highest 5 percent or 1 percent of incomes.
  • Offering lower rates of corporation tax for companies that don’t pay anyone more than a certain multiple of the pay of the lowest earner

Corbyn said Labour would tackle low pay by setting up a Ministry of Labour “to get a grip on the anything goes jobs market free-for-all” and “end the race to the bottom in pay, working conditions and job insecurity.”

Labour, he said, would also ensure all workers had equal rights at work from the moment they started a job and require collective bargaining agreements in key sectors in a properly regulated labour market, so that workers cannot be undercut. Corbyn said that would “bring an end to the unscrupulous use of agency labour and bogus self-employment, to stop undercutting and to ensure every worker has a secure job with secure pay“. He added that Labour would also set the minimum wage at the level of the living wage, expected to be £10 per hour by 2020.

On the BBC’s Today programme earlier that day Corbyn had come out in favour of a cap on maximum earnings by executives although in his interview with Sky he put more emphasis on tackling the gap between employees pay within companies as detailed in his speech.

What do you think?