Government to announce new measures to clamp down on executive pay
Plans to increase representation of employees on company boards also likely to be introduced
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Your support makes all the difference.Government ministers are planning to introduce a new register of publicly listed companies whose investors are unhappy with how much its executives are being paid, reports suggest.
Greg Clark, the Business Secretary, is said to be ready to name and shame businesses where at least 20 per cent of investors believe bosses are being paid too much.
The register is likely to be managed by the Investment Association, which oversees the UK’s investment management industry, according to Sky News. The plans are due to be announced next week.
The move is likely to be part of a series of measures designed to reign in executive pay.
New laws will be introduced to force almost 1,000 listed companies to publish and explain the ratio between the pay of their highest earner and that of their average UK employee.
Private companies not listed on the stock exchange will be encouraged to sign up to a new corporate governance code. However, this will be voluntary rather than mandatory.
At the same time, workers’ representation will be increased by an amendment to the Corporate Governance Code that will either insist a board member is appointed to speak for employees or an advisory council set up to advise executives.
That would fulfil the Conservatives’ manifesto pledge to “deliver worker representation on company boards”.
However, the party has not yet implemented its promise to make executive pay “subject to strict annual votes by shareholders”. And its policy falls short of Labour’s vow to cap executive pay at 20 times that of the average worker for companies receiving public money.
The average chief executive at Britain’s main listed companies is currently paid 128 times more than the average employee. They earn an average of £4.5m per year compared to £28,200 for full-time employees.
During her campaign for the Conservative leadership in 2016, Theresa May said she wanted to see employee representatives on company boards and said she would introduce new laws to give shareholders the legal right to decide what executives are paid.
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