The Brexit vote has come as a surprise to many. It’s no secret that the result has led to a huge rift down the country and beyond. With two sides of the debate equally as passionate, it was bound to cause division.
Recently, a senior executive at Hermes Investment Management warned of a specific division coming to light in the wake of the Brexit outcome. He warned that the Brexit vote shows that social 
division is at an all-time high. He believes that because of this, top executive pay needs to be reconsidered.
On average, FTSE 100 bosses earn £5 million in comparison to the UK’s average wage of £27,600. Hans-Christoph Hirt, co-head of Hermes’ stewardship arm Hermes EOS said: “there is a big gap between people on the street and the people who do voting on remuneration and that is not sustainable. Fund managers are waking up to the fact that they work for pension funds and the man on the street. The discussions have been ongoing but [Brexit] will give a different dimension to it.”
He added: “Bridging the gap in pay is the equivalent of bridging the gap between Westminster and east England. There is a similarity between the two situations. The pay gap is growing and growing and it is comparable to the situation in north-east and east England where people feel out of touch and not represented.
“The discussion should focus more on what is necessary and not what is the maximum possible or acceptable. If they see an outcome that doesn’t feel right they should use discretion to make an adjustment.”
Larger waves of inequality
The comments from Hermes echo an earlier warning from another British fund manager, Standard Life. On Tuesday they said that Brexit has shown the dangers of the widening gap between the rich and poor.
“The vote has highlighted deeper fault lines in the global economy. Increasing income inequality over recent decades has fostered populist anger across many economies. A failure to address these challenges raises the risk of these types of political shocks,” Standard Life said.
Brexit has also caused the Bank of America and Pimco to face the subject of inequality. The Bank of America said that Britain’s economic recovery had been unequal and that this would only be made worse by leaving the EU.
Pimco, said that if populist or nationalist parties did not come to power, then Brexit could still put pressure on governments to take a look at inequality and do something about it.
This all comes not long after the recent protests against executive pay, the most notable being Sir Martin Sorrell’s £70m pay deal. WPP, the world’ biggest advertising company announced earlier this year that it would pay Sorrell £70.4m in cash and shares.
The Local Authority Pension Fund Forum (LAPFF), which represents 70 pension funds said that Sorrell’s pay had raised 56% over the past five years, twice as much as shareholder returns increase. They urged its members to vote against the pay packet awarded. Increasingly, investors are voting against the enormous pay that executives are offered often despite heavy profit losses.