Smith & Nephew seeks pay premium for US executives over those in UK

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Smith & Nephew wants to increase pay for its US executives to bring it closer to American levels, with the chair of the FTSE 100 medical devices company calling UK pay packages “not sustainable”. 

The company, which has had four chief executives in five years, on Monday published a package of changes to its remuneration policy as part of efforts to address high executive turnover. 

Smith & Nephew’s move is the latest signal that big UK-listed companies with a large proportion of overseas revenues will try to challenge shareholder reluctance to approve higher pay in this year’s AGM season. 

“There is an entire group of companies who are what I call Brilos: British in listing only,” Rupert Soames, who took over as chair of Smith & Nephew last September, told the Financial Times. These were “companies that are listed in London but have a relatively small part of their revenues arising in the UK”. 

Executive directors at listed groups are typically paid according to where the company has its primary listing, so Smith & Nephew’s chief executive Deepak Nath, an American based in Fort Worth, Texas, is at present paid in line with UK peers. 

“The current position on pay is not actually sustainable,” said Soames. The company’s new policy would put US-based executives on a path to higher pay, in line with local competitors and diverging from the UK market, where its chief financial officer is based.

The reform “is a sensible and pragmatic way of handling an issue where companies listed in London need to be able to recruit talent from markets around the world and those markets have different practices”, Soames said.  

Other large UK-listed businesses, including the London Stock Exchange Group, are preparing to seek shareholder backing to increase pay for UK executives by benchmarking them against US peers. 

Pay has been a…