Patrick recently left The Investment Association after a career of over 15 years and is currently an Independent specialist on executive remuneration issues.
In what ways does employee share ownership serve a useful purpose?
It helps employees to feel they have a sense of purpose at their place of work and to be motivated to succeed. In short, it provides an ownership factor that employees are committed to an enterprise and feel loyal to it.
How can we widen and deepen the adoption and use of employee share ownership?
Effective political lobbying is a key to securing improved tax incentives. It is essential to be able to communicate the benefits of employee share ownership to companies and their employees.
What is the greatest obstacle to wider and deeper employee share ownership?
Mostly it is the risk perceived by employees to invest in shares. There is a need to communicate the merits of long term share ownership, particularly in sectors that are cyclical and/or volatile.
What has been the most important development in employee share ownership during your career?
My career, both at the ABI and The Investment Association, has focused on executive remuneration. In terms of broad-based employee share ownership I think the most important development has been institutional shareholder support provided through The Investment Association’s guidelines –The Principles of Remuneration.
Which change to employee share plans legislation, in the UK or elsewhere, would you most like to see?
I think further encouragement from the Chancellor through broader tax thresholds would be welcomed.
What has been the most significant development in executive reward during your career?
The central theme of ‘pay for performance’ is to combine an alignment between executive pay and shareholders’ interests. Clearly, over time certain aspects of long-term incentive plans (LTIPs) have not worked as well as they should. In particular, the significant growth of executive pay in relation to pay generally for the rest of the population has been a major concern and this growth in inequality could be considered an unintended consequence of ‘pay for performance’.
Which changes to executive reward legislation have been most significant in recent years, and which change would you most like to see?
The move introduced in 2002 requiring the Directors’ Remuneration Report to be included as a part of the Annual Report. Then in 2013, the number of changes introduced to bring greater transparency to executive remuneration and to give more control to shareholders with the binding vote. It remains to be seen whether this latest legislation is successful in curbing the ever increasing complexity and rise in executive pay.
l think the time has come to revisit the position of ‘best practice’ on executive pay, whether the process can be made simpler and which does not encourage pay ‘ratcheting’. Of course, where higher rewards are awarded, these must be subject to a higher performance attainment.
I also think there should be more questioning on the value of an executive’s worth. In terms of other changes I would welcome longer periods for executives holding shares in their companies.
Which book has most changed your life?
Great Expectations by Charles Dickens – certainly an influence when I was a teenager.
Which living person would you most like to meet?
The Queen – Otherwise, any person for whom I have a great admiration.
Do you have a favourite sport?
Table tennis played at home!
How do you relax?
Gardening at home or painting and drawing all seem an ideal way to relax.