Companies publicly listed in the UK are going to be expected to make public how much their chief executives are paid, compared to their average worker, under new laws.
UK business secretary Greg Clark has set out the government's corporate governance reforms, which have been designed to “enhance the public's trust in business”. This is to be achieved through boosting transparency.
The laws will also force all listed companies with significant shareholder opposition to executive pay packages to have their names published on a new public register. The government said that new measures will also be introduced to ensure the voice of employees is heard in the boardroom.
UK companies are going to have to reveal the pay ratios between chief executives and the average worker, under a package of government reforms.
According to the Department for Business, Energy and Industrial Strategy, the world’s first public register of listed companies where a fifth of investors have objected to executive annual pay packages will be set up in the autumn.
Mr Clark said that the UK has a reputation for being a dependable and confident place in which to do business, adding that the country’s legal system, framework of company law and standards of corporate governance “have long been admired around the world”.
He went on to say: “We have maintained such a reputation by keeping our corporate governance framework under review. Today’s reforms will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders.”
The proposals have been welcomed by the Institute of Directors. Its director general Stephen Martin said the organisation was “particularly pleased that there will be a code for large private businesses, as the principles of good governance should extend beyond the companies listed on the stock market”.
Meanwhile, Paul Drechsler, president of the Confederation of British Industry, said: “We know that how companies act and behave determines the way people think about business.
“Companies take this seriously and we look forward to working closely with the government to ensure the UK maintains its reputation as a global leader in this field and as a primary location for international investment.”
However, the Trades Union Congress (TUC) has called the reforms “feeble”. TUC general secretary Frances O'Grady said: "This is a far cry from Theresa May’s promise to crackdown on corporate excess. It’s a feeble proposal, spelling business as usual for boardrooms across Britain.”
The TUC said it welcomed the new proposal, but is concerned that the pay ratio will be calculated between executive salaries and the average worker, not between executives and the lowest-paid workers.
Posted by Jon Aspinell on 31st August 2017
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