Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
Now that the UK is about to overhaul listing rules to try to revitalize its ailing stock market, some may wonder which companies will remain. So far, some US-based companies, such as plumbing merchant Ferguson and construction group CRH, have packed their bags.
Now Ashtead, a £24bn plant hire company, has suggested it could leave. More than 90 percent of Ashtead’s sales come from North America. Over the past five years, sales growth there has been more than half that of the UK.
If UK listing is a pain, you wouldn’t know it. Under chief executive Brendan Horgan, Ashtead shares are among the five best performers in the FTSE 100. The question is not whether investors will pay for Ashtead’s growth but rather whether they will pay for it.
S&P 500 executives pocket around three times what their FTSE 100 peers earn, a long-simmering complaint in the City. Remuneration must be globally competitive to attract and retain the best talent, the argument goes.
Ashtead’s share price performance suggests this is not always the case. Horgan earns less than Matthew Flannery, who runs United Rentals, the largest plant rental company in the United States. Horgan took home about $8 million total last year, compared to Flannery’s $11 million, according to S&P calculations. In five years, the difference amounts to about $16 million in Flannery’s favor. However, until last year, the share prices of the two roughly corresponded to each other.
Ashtead has faced some pushback on pay, with two-fifths voting against the boss’s package in 2021. An additional long-term incentive scheme in an effort to bring pay in line with the US has upset the shareholders at that time. The next binding vote on wages will take place later this year.
United Rentals has received 90 percent shareholder support on compensation over the past three years. Ashtead would understandably like similar backing, not to mention additional incentives. In fact, pay in Ferguson has increased since he moved to the United States in 2022. Long-term incentives for boss Kevin Murphy are estimated at 430 percent of salary in 2024, up from 250 percent last year.
The current debate over the UK’s pay culture offers an opportunity to boards that have perhaps been shy about taking the issue to shareholders. The stock market led the way, doubling the top salary offered to boss David Schwimmer.
The UK process can always be more contentious than the US, with higher demands for high-performance testing. That is not bad. But shareholders and boards alike feel the mood in London is changing. Hints at leaving the UK are both a negotiating tactic and a genuine threat.