Will millennials change executive pay

Will millennials change executive pay

Happy Easter 2023

This is Remuneration Associates’ video library – and this is a brief summary of the key points from today’s video…

St John the Evangelist Church in East Holme

A wonderful rural church, but empty of parishioners and a congregation over 60 years in age. Where is the future in that?

Is this true of capitalism, the means of resource allocation we have relied upon for centuries?

No. In the UK, the average age of investors has *dropped* from 40 years of age (2020) to 35 years old (2021)

In the US, 45% of the population are investors[1] and of those 26% started investing in 2020, or later. Those investors are:

  • 3x more likely to invest ‘self-service’ from a mobile platform;
  • 2x more likely to invest based upon ideas they gleaned from Social Media
  • 2x more likely to invest in crypto currency

37% of 18 to 34 year olds are investors, of whom 26% review their portfolio *weekly*

That is somewhat in contrast to the advice of Warren Buffet: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for 10 minutes”

So, the Anglican Church has a problem maintaining its congregation for lack of enthusiasm amongst those under 30 - how healthy is capitalism and what does that mean for executive pay?

As a reminder, capitalism is a simple system. We invest in ideas with the hope of returns that are greater than our expectations, and our expectations are set based on opportunity cost: where else might we obtain a return on our money? Beat those expectations, that ‘cost of capital’, and everyone is happy – we are encouraged to invest further, the value of our investment increases, attracting more investment, and so on. The reverse is also true.

That system fuels investment into:

  • pre-clinical life science companies finding new treatments, new drugs
  • companies commercialising ideas
  • companies making sound laboratory experiments on an industrial scale

I guarantee the average millennial checking their portfolio on a mobile phone doesn’t make that connection, but they are supporting capitalism ‘without going to church’. They might get bored more rapidly, they might struggle to define what ‘success’ looks like, but I guarantee the return on their investment is going to remain the important yard-stick in their lives for a very long time.

[1] Source: InvestinYou NextGen Survey: Stocks, Mutual Funds, Bonds, CryptoCurrencies, ETFs

As Managing Director, Simon Patterson leads the team at Remuneration Associates (Rem.n), a specialty consulting firm focused on executive pay owned by the professional staff themselves. Formerly Pearl Meyer (London), the team have 35+ years of accumulated experience working together, they are actively engaged as advisors to remuneration committees of some of the largest and some of the fastest growing companies, globally. Mr Patterson and the team consult widely on executive compensation, incentive compensation design, and performance measurement.

Pearl Meyer agreed to divest its London operations on June 17th, 2022. Simon Patterson (Managing Director) and his team now own Remuneration Associates Ltd – an independent consulting firm working with clients around the world, which builds upon the legacy of the London operation.


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