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With the UK poised to overhaul listing rules to try to revitalise its flagging stock market, some may wonder which companies will remain. So far, some US-based businesses, such as plumber’s merchant Ferguson and construction group CRH, have packed their bags.
Now Ashtead, a £24bn plant hire business, has suggested it could leave. More than 90 per cent of Ashtead’s sales come from North America. Over the past five years, sales growth there has outpaced that in the UK by half.
If the UK listing is a drag, you wouldn’t know. Under chief executive Brendan Horgan, Ashtead shares are one of the top five performers in the FTSE 100. The question is less whether investors will pay up for Ashtead’s growth but more whether they will pay up for him.
S&P 500 executives pocket about three times what their peers do in the FTSE 100, a long-simmering complaint in the City. Pay must be globally competitive to attract and keep the best talent runs the argument.
Ashtead’s share price performance suggests this is not always the case. Horgan makes less than Matthew Flannery, who runs United Rentals, the largest US plant hire business. Horgan took home about $8mn in total last year compared with Flannery’s $11mn, according to S&P calculations. Over five years, the gap works out to about $16mn in Flannery’s favour. Yet until the last year, the share prices of the two roughly tracked each other.
Ashtead has faced some pushback on pay, with two-fifths of votes going against the boss’s package in 2021. An additional long-term incentive plan in an effort to equalise pay with the US irked shareholders then. The next binding vote on pay is due later this year.
United Rentals has received 90 per cent support from shareholders on pay over the past three years. Understandably, Ashtead would like similar backing, not to mention the added incentives. Indeed, pay at Ferguson is up since it moved to the US in 2022. Long-term incentives for boss Kevin Murphy are pitched at 430 per cent of salary in 2024, up from 250 per cent last year.
The current debate about UK pay culture offers an opportunity to boards who, perhaps, have been shy of taking the issue to shareholders. The stock exchange led the way, doubling boss David Schwimmer’s maximum pay on offer.
The UK process may always be more fractious than stateside, with higher demands for proof of high performance. That is no bad thing. But both shareholders and boards sense the mood in London is changing. Hints about quitting the UK are both negotiating tactic — and genuine threat.
andrew.whiffin@ft.com
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