01 SEP 2017

Executive pay

The subject of pay seems to come up in the media on a regular basis, either because we think people aren't getting enough or because we think they are getting too much. This time around it's about executive pay. The issue is not so much about the actual pay but about the differential between the pay of bosses and workers.

Last year the Prime Minister made clear that the behaviour of a small number of companies had damaged the public's trust in big business. She set out propos...als to improve transparency and accountability and give employees a voice in the boardroom. The Business Secretary, Greg Clark, has now set out the government's corporate governance reforms to enhance the transparency of big business to shareholders, employees and the public. New laws will be introduced which will force all listed companies to reveal the pay ration between bosses and workers. Companies that meet with significant shareholder opposition to executive pay packages will be published in a new public register. This will be the worlds' first such register and will be overseen by the Investment Association, a trade body that represents UK investment managers. New measures will also seek to ensure that the voice of employees is heard in the boardroom. Reforms have just been announced and will follow a thorough consultation process.

A simple principle runs throughout our proposals: workers and shareholders should have a bigger say and a louder voice in the running of the companies in which they invest their labour and capital. I fully support the Business Secretary when he says that one of Britain's biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business. Our legal system, our framework of company law and our standards of corporate governance have long been admired around the world. We must ensure that this reputation is maintained.

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