Next faces shareholder revolt over pay transparency
Next has suffered a shareholder revolt after more than a fifth backed proposals for the fashion giant to provide more transparency over pay at its annual general meeting (AGM).
Next has faced a shareholder revolt after more than a fifth backed proposals for the fashion giant to provide more transparency over pay at its annual general meeting (AGM) on Thursday (15 May).
The retailer saw 26.9% of shareholder votes supporting a resolution calling for the company to report on how many of its 40,000 workers are paid under the real living wage of £12.60 per hour.
The proposal was put forward by ShareAction, which campaigns for responsible investment, and was backed by institutional investors such as Axa Investment Managers, Greater Manchester Pension Fund, Scottish Widows and Trust for London.
Next had opposed the resolution due to its “significant cost implications”, and said previously that it wanted “flexibility” to set its own pay rates, instead of outsourcing the decision to a third party.
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Next explained that setting its pay rates was “a fine balance between the interests of investors (who are ultimately savers and pension funds), consumers and employees (many of whom are also savers and investors)”.
In a statement on 15 May, the retailer said: “Although the board does not agree with the form of the resolution, it recognises the value of providing more clarity on how wages are determined and managed at Next.
“The company has a long-standing commitment to transparency and aims to offer shareholders meaningful insight into its decision making.
“Accordingly, we welcome the suggestion and will expand our disclosure on wage-setting principles and practices in our next Annual Report.”
Next said in accordance with UK Corporate Governance Code, it will consult with shareholders who voted for the resolution and will update the market and any actions taken by 15 November.
ShareAction chief executive Catherine Howarth added: “Today’s vote sends a tough message to the board of Next and the entire retail sector – clearly, investor concern is rising around the problem of retailers underpaying staff and the effects this is having on their business and workers.
“This is a serious level of support for resolutions of this kind and Next is now legally obliged to respond to this resolution and clarify how it will act on investors’ concerns.
“We look forward to engaging the company based on a new level of transparency around low pay, a key step to better protecting all its staff with a real Living Wage.”
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