New rules on cor­po­rate pay to give em­ploy­ees ‘a voice in the boardroom’

Belfast Telegraph - Business Telegraph - - News - BY SHAUN CON­NOLLY

NEW laws aimed at bring­ing greater pay trans­parency to the boardroom are be­ing un­veiled by the Govern­ment to­day.

The move comes af­ter Prime Min­is­ter Theresa May branded fat-cat bosses the “un­ac­cept­able face of cap­i­tal­ism”.

Mea­sures be­ing out­lined by Busi­ness Sec­re­tary Greg Clark will make all listed com­pa­nies re­veal the pay ra­tio be­tween bosses and work­ers and jus­tify the dif­fer­ence.

Firms with sig­nif­i­cant share­holder op­po­si­tion to ex­ec­u­tive pay pack­ages will also have their names in­cluded on a pub­lic reg­is­ter un­der the re­forms.

Em­ploy­ees will also be given a voice in the boardroom, Mr Clark said. How­ever, op­po­si­tion par­ties branded the mea­sures a missed op­por­tu­nity.

Mr Clark said: “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 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.”

Moves to boost the rep­re­sen­ta­tion of em­ploy­ees’ in­ter­ests at board level will be over­seen by the Fi­nan­cial Re­port­ing Coun­cil (FRC).

The FRC is to amend its UK Cor­po­rate Gover­nance Code so firms ei­ther as­sign a non-ex­ec­u­tive di­rec­tor to rep­re­sent em­ploy­ees, cre­ate an em­ployee ad­vi­sory coun­cil, or nom­i­nate a di­rec­tor from the work­force.

CBI pres­i­dent Paul Drech­sler said: “The CBI is very clear that the un­ac­cept­able be­hav­iour of a few firms does not re­flect the high stan­dards and re­spon­si­ble be­hav­iour of the vast ma­jor­ity of com­pa­nies.

“If pay ra­tios in­clude mean­ing­ful con­text they could prove a use­ful ad­di­tion to the de­bate about ex­ec­u­tive pay. Pro­vid­ing share­hold­ers with a ‘say on pay’ has been an ef­fec­tive tool and a pub­lic reg­is­ter will help to shine a light on the small mi­nor­ity of cases that war­rant greater at­ten­tion.”

Chris Cum­mings, chief ex­ec­u­tive of the In­vest­ment As­so­ci­a­tion, said: “Our mem­bers, who man­age the pen­sions of 75% of UK house­holds and own over one third of the FTSE, be­lieve that not all com­pany boards that re­ceive big share­holder dis­sent are cur­rently do­ing enough to ad­dress in­vestor con­cerns.

“This pub­lic reg­is­ter will help sharpen the fo­cus on the those who must do more, ena- bling our mem­bers to hold the coun­try’s big­gest busi­nesses to ac­count and lead­ing to bet­ter-run com­pa­nies. We look for­ward to work­ing with Govern­ment to de­liver the pub­lic reg­is­ter and aim to launch it later this au­tumn.”

Stephen Martin, di­rec­tor gen­eral of the In­sti­tute of Di­rec­tors, added: “Pay ra­tios will sharpen the aware­ness of boards on the is­sue of re­mu­ner­a­tion, but they can be a crude mea­sure.

“Com­pa­nies will have to pre­pare them­selves to ex­plain how pay as a whole in their busi­ness op­er­ates, and why ex­ec­u­tives are worth their pack­ages.”

Prime Min­is­ter Theresa May on a visit to bus and coach man­u­fac­turer Alexan­der Den­nis last week

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.