the times | Wednesday April 8 2020 2GM 33
Business
Alex Ralph
The government is urging companies to
curtail executive pay packages as a wave
of businesses furlough staff and access
taxpayer aid during the pandemic.
Ministers are looking for company
remuneration committees to use “dis-
cretion” when agreeing directors’ pay
and to adjust future pay in some cases.
The government also wants share-
holders to be satisfied that executive
pay is in line with the experience of
wider stakeholders.
The lockdown of Britain and large
parts of the economy has affected mil-
lions of people, with some working
fewer hours or taking unpaid leave and
others, particularly those in the leisure,
retail and travel industries, being fur-
loughed but employed with support of
the taxpayer.
Large numbers of companies have
also suspended dividends to preserve
cash and stock market investors are
being called upon increasingly to keep
companies afloat by supporting emer-
gency fundraisings.
It has meant that companies are
under pressure to restrain executive
pay, which has been a contentious issue
since the financial crisis. Businesses
including Associated British Foods, the
owner of Primark, WPP, the world’s
biggest advertising group, Taylor
Wimpey, the housebuilder, and Rento-
kil Initial, the pest control specialist,
have begun to cut pay packages.
There are concerns that multi-year,
share-based schemes being put in place
during this year’s annual shareholder
commodities currencies
$5035205Brent crude (6pm)
$33.11 (+0.30)world markets (Change on the day)
$Gold
$1,655.48 (+4.58)
1,7501,6501,5501,4507,5006,5005,5004,500
Mar 10 2618 Apr 3 Mar 10 2618 Apr 3 Mar 10 18 26 Apr 3 Mar 10 2618 Apr 3 Mar 10 2618 Apr 3FTSE 100
5,704.45 (+122.06)
1.3501.2501.1501.050$1.2001.1501.1001.050¤£/$
$1.2333 (+0.0037)£/€
€1.1329 (-0.0050)Mar 10 2618 Apr 3Dow Jones
22,643.86 (-26.13)
30,00026,00022,00018,000Ministers warn bosses should share staff ’s pain
Executives
‘must take
pay cut too’
meeting season mean that executives
could reap large highly inflated rewards
in future if stock markets rebound after
the pandemic.
The Investment Association, which
represents members managing £7.7 tril-
lion in assets, is asking companies to
look at the end of the schemes to ensure
“there haven’t been windfall gains”. It
has written to FTSE 350 chairmen and
chairwomen, outlining how sharehold-
ers will support companies. It has said
that “if a company cancels dividend
payments or makes significant changes
to their workforce’s pay, IA members
support boards and remuneration
committees that demonstrate how this
should be reflected in their approach to
executive pay”.
Schroders, the asset management
group, wrote to all FTSE 350 companies
last week offering its support, but also
cautioning that “where companies seek
additional capital, we would expect their
boards to suspend dividends and to re-
consider management’s remuneration”.
One board remuneration adviser to
big British companies said that those
groups “suddenly furloughing staff
need to think very seriously about
whether you pay a bonus”.
A spokesman for the Department for
Business, Energy and Industrial Strate-
gy said: “While executive pay is ulti-
mately a matter for individual compa-
nies to decide, so long as they comply
with the law, we would expect compa-
nies to act in a socially responsible way
and to exercise judgment and discre-
tion when considering executive pay.”
Investors lose out at AGMs, pages 34-35ASOSFashion play Asos shares rose after it raised more than £200 million from investors to bolster its balance sheet. Page 35
Eurozone split over coronabond plan
Bruno Waterfield Brussels
Eurozone finance ministers failed to
agree last night on how to fund a
coronavirus economic recovery pack-
age or an emergency trigger for the
European Union’s bailout fund.
Despite Mário Centeno, the Portu-
guese president of the Eurogroup,
pleading with governments to put the
single currency’s traditional divisions
between the richer north and poorer
south behind them — “This is no time
for business-as-usual politics,” he said.
“We must show our citizens that
Europe protects them” — a video con-
ference ended without resolution. The
talks will continue today.
The consequences of the EU not
taking the step of deeper integration
with “coronabonds” to fund recoverycould be long-term economic damage
in high-debt countries, risking a euro-
zone sovereign debt crisis that could
endanger the currency.
“Nothing would be worse for Europe
than for some states, because they are
richer, to get off to a quick start, while
others, because they cannot afford it,
start slowly,” Bruno Le Maire, the
French finance minister, said. “We all
need to recover at the same speed to
guarantee the cohesion, solidarity and
unity of the eurozone and our common
currency.”
Italy, Spain, France and six others are
pushing for the EU to agree to share the
debt burden of the post-pandemic
economic recovery. While national
governments deal with the bulk of
measures to fight the pandemic, there
are fears that countries such as Italy,Spain or even France could be sunk by
the subsequent increase in debt costs.
During an acrimonious summit two
weeks ago, Italian and Spanish leaders
warned that without the issuing of
common bonds the EU’s future would
be threatened by a popular backlash.
In an attempt to defuse a crisis,
Germany has backed plans to use the
eurozone’s €410 billion European
Stability Mechanism, which is under-
written by national guarantees, to
provide emergency credit lines without
stringent political conditions.
Under the plan, loans or precaution-
ary credit lines would not include the
usual “troika” inspections of treasury
accounts by EU officials or prior com-
mitments to spending cuts or structural
reforms as a price for cash. The move
Continued on page 34, col 5World stock markets rallied for a second
consecutive day amid further signs that
the spread of the coronavirus is slowing,
but the revival failed to last in New York.
After the FTSE 100 closed up 122.06
points, or 2.2 per cent, at 5,704.45, strong
early gains on Wall Street fizzled out
and its leading indices ended the session
marginally lower.
The pandemic has wiped trillions of
From bear to bull? Global markets extend rally into second day
James Dean, Callum Jones
dollars from global stocks, but a recent
slowdown in the rate of infections has
raised investors’ hopes that the market
has bottomed out. Cases in New York,
the American city hit most severely by
the virus, may have peaked earlier than
expected, figures suggested yesterday.
In Washington, Congress and the
White House are considering a second
round of economic stimulus worth
about $1 trillion. Larry Kudlow, an
economic adviser to President Trump,
said yesterday: “In the next four to eight
weeks we will be able to reopen the
economy. The power of the virus will be
substantially reduced and we will be
able to flatten the curve.”
The S&P 500 index slipped 4.27
points, or 0.2 per cent, to close at 2,659.41
last night. The index will enter a bull
market if it closes at or above 2,684.88.
On Monday it jumped by 7 per cent.
The FTSE 100 has fallen by 23.5 per
cent since the start of the coronavirussell-off and the S&P 500 has lost 21.5 per
cent. An index falls into a bear market
when it drops 20 per cent or more from
its previous high and enters a bull
market when it rises at least 20 per cent
from its previous low, although the
definitions vary.
With the rate of new infections
slowing in France, Spain and Italy, the
pan-European Stoxx 600 index closed
up 1.9 per cent. The Dax index in Ger-
many closed up 2.8 per cent, China’sShanghai Composite gained 2.1 per cent
and the Nikkei in Japan rose by 2 per
cent. The Dow Jones industrial average
seemed set to follow suit, but New
York’s sell-off meant it closed down
0.1 per cent, or 26.13 points, at 22,653.86.
The technology-focused Nasdaq fell
0.3 per cent, or 25.98 points, to 7,887.26.
Brent crude, the oil price benchmark,
fell 3.6 per cent, or $1.18, to $31.87, sur-
rending early gains. Gold was down
0.6 per cent, or $9.36, at $1,651.61.