Next suffers shareholder rebellion over pay transparency

Next’s shareholders have pushed back against what some deemed as a lack of transparency over its staff pay after more than a fifth backed a resolution calling for more information.

The vote at the retailers AGM yesterday (Thursday 15 May) saw 26.9% of shareholder votes in support of a resolution that called for more information about how many of its staff are being paid below the ‘real living wage’.

The resolution was brought forward by ShareAction and was supported by 102 individual investors and institutional investors including Axa Investment Managers, Epworth Investment Management, Friends Provident Foundation, Greater Manchester Pension Fund, Scottish Widows and Trust for London.

While 73.1% voted against the resolution, in the realm of corporate governance, a shareholder vote against a proposal exceeding 20% can be interpreted as a “shareholder rebellion”.

Established by the Living Wage Foundation, the real Living Wage is the minimum hourly rate necessary for workers to afford housing, food, and other basic needs. The new real Living Wage rates for 2024/25 are £12.60 per hour in the UK (up from £10.90) and £13.85 per hour in London (up from £11.95).

Reacting to the results of the vote, Catherine Howarth OBE, chief executive at ShareAction 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.”

She added: “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.”

Next said: “Shareholder Resolution 26, which was requisitioned by ShareAction, was defeated by a very significant margin, with approximately three votes against every one in favour.

“…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.”