Next faces shareholder pressure over staff pay transparency

Retail giant Next has come under pressure from shareholders after more than a quarter supported calls for greater transparency around staff pay at its Annual General Meeting on May 15.

A total of 26.9% of shareholder votes backed a resolution urging the retailer to disclose how many of its 40,000 employees are paid less than the real Living Wage of £12.60 an hour.

The proposal was brought forward by responsible investment campaign group ShareAction and gained the backing of major institutional investors, including Axa Investment Managers, Greater Manchester Pension Fund, Scottish Widows and Trust for London.

Next had opposed the resolution, citing the “significant cost implications” of the proposal. The company stated that it preferred to retain “flexibility” in setting pay rates, rather than delegating such decisions to external parties.

In a statement, the retailer explained: “Setting pay rates is 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).”

However, Next acknowledged the call for greater openness, saying: “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.”

In line with the UK Corporate Governance Code, Next confirmed it would consult with shareholders who supported the resolution and provide an update on any actions taken by 15 November.

ShareAction’s chief executive, Catherine Howarth, commented: “Today’s vote sends a strong message to Next’s board and to the wider retail industry. Investors are increasingly concerned about the issue of low pay and its impact on both businesses and their employees.

“This level of shareholder support is significant. Next is now obliged to respond to the resolution and outline how it will address investors’ concerns. We look forward to engaging with the company as it increases transparency around low pay—an important step towards ensuring all staff receive a real Living Wage.”