Sports Direct exec & employee pay

Just a quick reminder, here's the supporting principle of the UK Corporate Governance Code says about setting remuneration policy

[The remuneration committee] should also be sensitive to pay and employment conditions elsewhere in the group, especially when determining annual salary increases.

And here, for comparison, is what Sports Direct says about employee vs exec pay

EXPLANATION  OF  DIFFERENCES  IN  REMUNERATION  POLICY  FOR  OTHER  EMPLOYEES  

The Company has a large number of employees with different responsibilities and differing levels of seniority. Reward policies for employees other than Executive Directors are determined by reference to grade, role, performance and other relevant factors. The Committee does not consult with the wider employee population about the remuneration policy for Directors. However, the Committee has reviewed the salaries, other remuneration and other employment conditions of senior and middle managers throughout the Group, and has taken them into account in considering Directors’ salaries and the creation of new incentive schemes in order to create a sense of common purpose and sharing of success. Indeed, in order to reflect the Company’s “One Team” ethos, the 2015 Bonus Share Scheme applies to both Executives and eligible employees who meet the qualifying conditions as determined and agreed by the Committee on the same basis (including the performance conditions).

According to press reports, Sports Direct has the large majority of its employees on zero hours contracts, which also require those employees to seek approval from managers if planning to work elsewhere (which obviously will discourage some from doing so). Those employees are also not eligible for the bonus scheme (which covers about 3,000 people, according to City AM). 

Yet the company's remuneration report makes clear that the remuneration committee does not consider employees' views, and only looks at a small subset of the workforce when reaching decisions. Not surprising, then, that they have an upstairs/downstairs approach.   

The UK CG Code has always been toothless on this point about employment conditions vs exec pay decision. Unfortunately there's no evidence so far that the FRC/FRRP are likely to take a different approach. Toughening up the corp gov regime on this point is something that Labour ought to be thinking about...