Next suffers shareholder rebellion over pay transparency
Next has been dealt a bloody nose by shareholders after more than a fifth backed proposals to provide more transparency over pay at the firm's annual general meeting (AGM).
The retail giant saw 26.9% of shareholder votes supporting a resolution that called for more information about how many of its staff are being paid below the 'real living wage'.
This is a voluntary benchmark that is independently calculated by the Living Wage Foundation based on the cost of living and exceeds the legal minimum wage.
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.
While not legally binding, support for shareholder resolutions can put pressure on business leaders to respond to the matters raised and more than 20% of dissent can be considered a shareholder rebellion.
It comes as part of ShareAction's wider campaign to put pressure on retailers over low pay at this year's AGMs as the impact of the cost-of-living crisis continues.
The group has put forward proposals to the boards of Next, M&S and JD Sports as part of efforts to see workers paid a real living wage.
The Living Wage Foundation's wage is currently set at £12.60 per hour nationally and £13.85 per hour in London for those aged 21 and over.
This compares to the legal minimum wage, which is currently £12.21 for the whole country including London.
Reacting to the vote at Next, Catherine Howarth, ShareAction's chief executive, said: '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.
'Major national and international pension funds and other responsible investors have demonstrated they want to see action to drive up standards around pay across the retail sector.
'We urge shareholders to continue to support the resolutions co-filed at JD Sports and M&S which will go to a vote later this summer.'
Charlie Crossley, investment engagement manager at Friends Provident Foundation, said: 'Today's vote signals investors want retailers to address the transparency gap around wage practices.
'It is now clear Next should provide more meaningful disclosure on their policies for low paid workers, a crucial step toward ensuring workers can meet the cost of living.
'Sector-wide progress is required, which is why investors are also pursuing similar resolutions this year at other major retailers.'
In response to the result, Next said the resolution was not supported by the board and defeated by a 'very significant margin'.
However, the firm said it would expand what it publicly shares about its wage-setting principles and practices in its next annual report.
'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,' it said.
'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.'
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